§ (" .—(1) The Secretary of State may by order implement a scheme for the charging of foreign lorries and large passenger vehicles on entering the United Kingdom.
§ (2) The scheme may apply different charges for different classes of vehicle.
§ (3) Before implementing a scheme under this section the Secretary of State shall consult United Kingdom local authorities, road haulage and passenger vehicle operators, the European Commission and any other bodies which appear appropriate.
§ (4) The effects of the scheme must be reviewed annually.
§ (5) No order may be made by the Secretary of State under this section unless a draft of the instrument containing it has been laid before, and approved by a resolution of, each House of Parliament.").
§ The noble Earl said: My Lords, the amendment gives the power to the Secretary of State to levy charges on foreign lorries and coaches entering the UK.
§ UK hauliers are not competing on a level playing field. We discussed that matter at Question Time today. A UK based haulier is taxed at two and a half times the EU average. Today the noble Lord, Lord Macdonald, pointed out that Continental operators have to pay higher social taxes. However, when competing in a tough market, what matters is the marginal cost of operation. UK hauliers have a disadvantage on fuel alone that works out at about 12p a mile. At an average speed of 40 miles an hour, that works out at about £4.80 per hour, which is a little less than the cost of the driver!
§ The Minister will also point out that only a small percentage of UK haulage is undertaken by foreign hauliers. That is correct, but large sectors are closed to them, except for in the general haulage market. For instance, all the supermarket distribution and parcels work, most of the tanker operations and, by definition, all of the own account operations are not available to foreign hauliers. However, their activities are significant in the market that is available to them. Furthermore, relatively modest penetration in to a market can have a disproportionate effect on the market rate.
§ On top of these marginal costs, UK hauliers pay vehicle excise duty at rates that can be well over £3,000 per annum per vehicle. Many Continental countries have rates of less than £500. While British operators 1175 pay Eurovignette charges and road tolls, Continental operators have free and unlimited use of the UK's road network. In addition, foreign vehicles are not always subject to the UK's strict safety checks and, because they fill up abroad, they do not all run on ultra low sulphur diesel, and may therefore contribute to the degradation of British air quality.
§ In Committee I tabled a similar amendment which was specific to vehicles carrying abnormal loads. The Minister explained the difficulties in his usual persuasive way. He referred to the difficulties of the vignette directive, but could he not negotiate with our EU partners to overcome those difficulties? If he believes the difficulties to be insurmountable, does he feel that no solution similar to our Brit Disc is feasible?
§ My amendment clearly requires some fine tuning. However, at this stage of the Bill, it is designed to give the Minister the opportunity to state how he will deal with the very real problems that I have described. I beg to move.
My Lords, I support the principle of the amendment. However, I take issue with some of the statistics that the noble Earl, Lord Attlee, mentioned. I also have a few queries as regards the statistics that my noble friend Lord Macdonald mentioned earlier at Question Time. However, that is a detail.
There is an inconsistency here in that foreign registered lorries which enter the UK do not pay to use our roads. They do not pay vehicle excise duty. They should be charged for using our roads under a system that is as simple to operate and as equitable as possible but also does not conflict with EU rules. As my noble friend said in Committee, because of EU rules all lorries, be they UK or foreign registered, would have to be charged the same amount. One would hope that a similar commensurate reduction would be made in the UK registered lorries' VED to make any charge neutral.
In the past Ministers and organisations have said that the cost of doing this would be much too high and that the Treasury would not get any money out of it. I think that is questionable. It is easy to sell a kind of tax disc at ports where lorries enter the country. I believe that for years the Swiss have sold motorists something similar to enable them to drive through Switzerland. The important thing is to establish the principle here. I know that at the moment there is a maximum rate that the EU allows one to charge. However, it is important to get the system established, even at that low rate and then try to persuade other member states and the Commission that the maximum permitted rate for such charges should be raised in the future. I hope that my noble friend will be able to give us some comfort on this matter.
§ Lord McIntosh of Haringey
My Lords, as has been said, the issue of a vignette was mentioned in Committee. It is an issue which the Government have considered. We have discussed it with the industry and others, including at the Road Haulage Forum.
1176 The issue is complicated because a vignette can be introduced only in the form set out in the relevant European Union directive. Among other things, this sets the maximum amount which can be charged in a year—some £930 for older, dirtier lorries and £750 for newer ones—and provides that we would have to charge the same amount for UK based lorries. As the amendment stands, it might be difficult to avoid charging UK lorries for a vignette in addition to the rates of vehicle excise duty which they now pay. I suspect that that is not what the noble Earl, Lord Attlee, wants. I also suspect that the Conservative Party would not wish in the run-up to the pre-Budget report to be on record as supporting an increase in the charges which hauliers would have to pay. However, the amendment might result in that.
There are various technicalities which would need to be sorted out before we could set up a vignette scheme. Although the regulation-making power proposed in the amendment is wide, it might not be wide enough to cover the necessary points. For instance, we would need to make arrangements for proper enforcement, which would mean amending primary legislation. This amendment does not provide for that. There might be other implementation issues which would need primary legislation. When a complex system is involved—and it has to be complex—it is important to make sure that the details have been thought through before taking the necessary powers; and there is, I am afraid, no time to do that before the Bill is enacted.
We would have to consider a vignette in relation to taxes and charges on the road haulage industry. It is likely that any rational change would have to be made in a finance Act which would not be within the powers of this House. Therefore, despite my sympathy for the aims of the amendment, it will not work.
§ 6.30 p.m.
§ Earl Attlee
My Lords, I am grateful for the Minister's response. I shall not argue statistics with the noble Lord. Lord Berkeley, when he has a copy of the UK transport statistics with him.
I stated that the amendment would require fine tuning. The Minister suggests some large-scale adjustments. I shall read carefully what he said. In the mean time. I beg leave to withdraw the amendment but may return to the issue at a later stage.
Amendment, by leave, withdrawn.
[Amendment No. 320 not moved.]
Lord Rotherwick moved Amendment No. 321:
After Clause 258, insert the following new clause—