UK: Lorry Road User Charging Update

Last Updated: 23 October 2012
Article by Rahul Bijlani

After many years of discussions and abortive plans, the government is proposing to introduce a road user charging scheme for heavy goods vehicles (HGVs), intended to come into force by 2015.

The Context

The UK road haulage sector has for some time been arguing that it faces unfair competition from European hauliers: not only are fuel prices cheaper in mainland Europe but foreign-registered HGVs do not pay to use the general road network in the UK, whereas UK-registered HGVs frequently pay charges or tolls in other European countries. Moreover, unlike UK-based hauliers who pay UK road tax and fuel duty, foreign hauliers who refuel their vehicles across the Channel contribute nothing towards the maintenance and improvement of the UK road network.

In this context successive governments have considered measures to 'level the playing field' for UK hauliers in the form of a lorry road user charge. This is complicated by the fact that any such scheme must comply with the relevant European legislation, the 'Eurovignette Directive' which aims to safeguard fair competition in haulage within the European Union and sets limits on the type and levels of charges that can be introduced. In particular the Directive means that a scheme cannot lawfully discriminate between UK-registered vehicles and vehicles from elsewhere in the EU.

Consultation on the latest proposals for a lorry road user charging scheme, which reflect a Coalition Agreement commitment to work towards a system of charges to ensure a fairer arrangement for UK hauliers, closed in April of this year. The Government has not yet formally responded to the consultation but the proposals have been broadly welcomed by groups such as the Freight Transport Association.

The Proposals

Under the Government's current proposals a road user charge would apply to both foreign and UK-registered HGVs but UK hauliers would be compensated for the increase in their costs, with the most likely mechanism being a reduction in Vehicle Excise Duty (VED). A reduction in VED to the minimum permitted by the Eurovignette Directive would mean 94% of the UK HGV fleet would not face an increase in their overall cost burden.

The charge would apply to individual HGVs (not their operators) of 12 tonnes and over driving on any road in the UK and would vary in amount according to vehicle type, weight and number of axles, ranging from £85 a year for the smallest HGVs up to £1,000 a year for the largest. Keepers of UK- registered HGVs would pay the charge for the same period and in the same transaction as VED, whereas foreign-registered HGV operators would be able to pay daily, weekly, monthly or annual charges. The daily rate would be up to £10 a day (the maximum permitted by the Eurovignette Directive) for large HGVs, which are estimated to account for over 90% of foreign-registered HGVs using UK roads. At this stage the rate is proposed to be calculated according to the VED band of the vehicle, but the government has stated its aim to consider charging by reference to emissions levels once the scheme has been introduced.

Administration and Enforcement

The Government intends to contract with a private-sector company to administer the scheme insofar as it relates to foreign HGVs. The charge would be paid online or at points of sale on or near the UK border, such as at ports or on ferries, with the intention that the charge would have to be paid before a foreign-registered HGV could drive on a UK road. The Driver and Vehicle Licensing Agency (DVLA) would administer the system for UK-registered HGVs, alongside the collection of VED (ie payment of an annual or six-monthly charge).

Payment of the charge would be enforced by the Vehicle Operator Services Agency (VOSA) which is currently responsible for checking UK and foreign hauliers' compliance with various regulations on road safety, drivers' hours and the like. A database of vehicles that have paid the charge would be maintained by the company contracted to administer the scheme and, by reference to that database, VOSA could check compliance with the scheme - no physical permit would be required.

Next steps

Primary legislation will be necessary to introduce a lorry road user charge. The government intends to introduce a Bill into Parliament in the session which commences in May 2013 with a view to bringing the scheme into force before the end of the current Parliament (May 2015). Before such a Bill is introduced further consultation on changes to VED structures may also be required.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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