Road Haulage: Fuel Costs (Hansard, 2 November 2000)

§ The Minister of State, Department of the Environment, Transport and the Regions (Lord Macdonald of Tradeston)
My Lords, the Government have been looking closely in the Road Haulage Forum at the economic and structural factors that affect the road haulage industry. The forum's work has shown that there are many different issues involved, including some over-capacity. Government decisions will continue to be taken in the interests of an efficient and competitive industry.

§ Lord Bradshaw
My Lords, I thank the Minister for that reply. Perhaps I may press him a little further. Has 1112 consideration been given to paying a scrappage allowance, which would allow some hauliers to leave the industry in a dignified manner? Furthermore, does the Minister agree, if that were to be considered, that it would be necessary to ensure that entry standards to the industry were raised, enforcement improved and that foreign lorries paid a fair price for using roads in Britain?

§ Lord Macdonald of Tradeston
My Lords, scrapping old vehicles may be useful if it is linked to higher entry requirements and so on. The Government keep an open mind on all such ideas, including the possibility of issuing a vignette or "Britdisc" for British hauliers, which would mean that there would be a levy on foreign lorries using our roads. Scrappage may be of assistance to the industry, but I must stress that no decision has been taken.

Lord Berkeley
My Lords, does my noble friend agree that the absences from the Benches opposite indicate that party's lack of a coherent policy on fuel duty? Does he further agree that the figures produced by NERA, the AA and OXERA show that users of the heaviest lorries pay only 70 per cent of their true track and environmental costs? Is my noble friend taking this into account in the forthcoming policy formulation?

§ Lord Macdonald of Tradeston
My Lords, the question of recovering some of the costs of the damage done to roads by traffic is constantly under consideration. It is true that British hauliers probably pay more than hauliers in any other country. Although in an ideal world one would like to recover the full costs, in the real world our hauliers are competing against lorry drivers and lorry companies from other countries and we must keep the competitive aspects in mind.

§ Lord Campbell of Alloway
My Lords, reverting to the Question, if there is over-capacity in the industry—which I believe there is, although I am not sure—does not that support the case for a reduction in fuel costs?

§ Lord Macdonald of Tradeston
My Lords, I cannot follow the noble Lord's logic, though I am sure that there is a point that I am simply missing. It is important to look at the industry's ability to compete. Competing while making reasonable profits raises complex difficulties. They involve matters such as the purchasing power of increasingly consolidating sectors, such as retail and manufacturing, and the fact that in some ways haulage is one of the more vulnerable links in the supply chain. People are therefore forced to work for margins lower than they may prefer. This makes for an efficient economy, but it also makes for some disgruntled employees in the companies working within it. The Road Haulage Forum is working with associations and trade unions 1113 and we have made a lot of progress in trying to define "over-capacity". However, there is still no simple answer.

§ Lord Hoyle
My Lords, does my noble friend recall that one of the issues at the time of the fuel crisis was competition from Europe? Can he confirm that the competition from Europe in terms of the actual business taken is very minimal indeed?

§ Lord Macdonald of Tradeston
My Lords, this is again a complex area. If we take what is known as "cabotage"—in other words, foreign lorries coming in and taking business from inside Britain—yes, it is very low. According to the most recent surveys, it is probably only one lorry journey in every thousand. On the other hand, competition in hauling goods across the Channel has become more intense and has affected sections of our lorry fleet. We look to give those sections as much protection as we can.

§ Lord Roberts of Conwy
My Lords, does the Minister agree that it would be unwise to do anything about any existing over-capacity in the road haulage industry while the railway freight industry is in its present condition?

§ Lord Macdonald of Tradeston
My Lords, we have had a gratifying increase in the amount of freight carried by rail in recent years. I look forward to that continuing in future, with the billions of pounds-worth of investment that have been set aside for rail freight within the 10-year transport plan. In terms of its relationship with road haulage, the inexorable growth in areas of haulage will still allow rail freight to expand. I do not see them as contradictory sectors; they can increasingly work together. As I said, over-capacity is a complex problem. There can be seasonal periods when there is something of an under-capacity. It also depends partly on regional pressures inside the United Kingdom. The statistics that many noble Lords may have seen refer to a 30 per cent over-capacity. Those figures are some four years old and I would not lay too much store on the methodology that produced them.

§ Earl Attlee
My Lords, is it correct that foreign trucks are coming into the UK full of very cheap but relatively high sulphur fuel?

§ Lord Macdonald
My Lords, it is true that foreign trucks are coming in with diesel that is not the ultra-low sulphur diesel that we incentivise and prefer. However, I should point out that British trucks can fill up on the Continent—and very cheaply, too, given the strength of the pound—and that they too can bring "dirty diesel" into Britain. I am delighted to say that the use of ultra-low sulphur diesel, which has a target date for implementation across Europe of a few years' time, is almost universal in the United Kingdom because of the co-operation of our oil companies and the discounts given by the Chancellor for ultra-low sulphur diesel.