Wednesday, 18 April 2012

Last day for submissions on UK heavy goods vehicle road user charging: UPDATED


Today is the closing date for public submissions on the proposals to introduce a truck (over 12 tonne) road charging scheme in the UK.

Submissions can continue to be made on the UK Department for Transport website here, with online forms.  I reported on the proposals before here, but in summary the intention is to introduce a vignette system involving pre-purchase of access rights to the highway network based on multiples of 1 day, 1 week, 1 month or 1 year as follows:

- It would be required for access to all public roads in the UK;
- It would apply for goods vehicles of 12 tonnes or over;
- It is not part of the Benelux/Danish/Swedish Eurovignette system;
- UK registered vehicles liable will have their vehicle excise duty reduced commensurate to the price of an annual vignette (although a small proportion will pay more);
- Revenue will not be hypothecated for highways expenditure;
- Vignettes will not involve stickers or labels, but will be an electronic record of payment enforced by Automatic Number Plate Recognition technology (similar to the E-Vignette in Hungary).

In my view, it is a simple system designed to capture the small proportion of foreign lorries that are prevalent in the South-East of England, and will generate a small amount of revenue, and have a small positive effect on the competitive neutrality of UK vs Foreign haulage firms (the Ireland-Northern Ireland situation may be more interesting).

An interesting dimension to the consultation is the question about distance based charging as an alternative. 

These are:

- What do you consider to be the likely advantages and disadvantages of a charging system based on distance travelled (as in Germany) as opposed to a time-based charge?

- If a distance-based charging system were adopted, should it apply to all roads or only certain categories of roads?

- Would you prefer a distance-based system even if this meant large cost increases or UK operators?

(Yes that was a typo it should be "for" not "or" - shame upon the Department for neglecting this)) 

From an economic efficiency perspective, I am a strong advocate of distance based charging, but it would open up the hornets' nest of refunding fuel duty in the UK - which I can understand the Treasury would be against.  Vignettes plug an issue with foreign lorries, but little else.   It is a mere transfer from vehicle excise duty to vignettes for UK hauliers, it does not address the cross-subsidies that mean that short haul lighter lorries proportionately pay more - relative to the road wear and tear they generate, to the longer haul heavier lorries.

The implication is that a distance based system should necessarily mean large cost increases.  It is perfectly feasible to design a system and charging table that simply reallocates the revenue currently collected amongst vehicle classes, and then addresses the issue of collection costs.  Yes, ANY form of direct charging of users will cost more than taxing some proxy for it.   It would be cheaper to tax people buying appliances than to bill their electricity usage, but the big gap is the economic distortions caused by existing forms of taxation (see the post below on the NSW Financial Audit).

Strangely, the UK government is keen to analyse indirect economic benefits and the more amorphous and controversial concept of "wider economic benefits" to justify support for a £15.8 (US$25.3) billion high speed railway.   Yet similar analysis has not been done of the costs and benefits of existing forms of motoring taxation relative to road pricing.

That is the gap in the current policy analysis around motoring taxation in the UK today.


  1. Has anyone heard the outcome of these proposals, I was under the impression if you submitted you would be informed by VOSA?

  2. A bill has been produced to give effect to the Lorry Road User Charge. I wasn't informed with my submission, but I have yet to go through the legislation in detail. My understanding is that little has changed from what was originally proposed.