Thursday, March 17, 2016

Budget Proves Interesting to Road Haulage and Freight Transport and Warehousing Groups

Fuel Duty Remains Frozen Despite Pleas for Reduction
Shipping News Feature
UK – The Budget always proves to be an interesting time with vested interests from the various industries across the UK urging Chancellor Osborne to favour their sector. The transport industry is of course no exception having for years called upon the government to take action to help UK logistics which continues to face several issues. Fuel duty remains at the top of the agenda for many trade associations and the news that it has been frozen for the sixth consecutive year has been welcomed by the Freight Transport Association (FTA), the Road Haulage Association (RHA), and the UK Warehousing Association (UKWA), as a means of easing pressure on UK supply chains, but each of the industry bodies felt that more could be done to stimulate growth in the nation's economy.

Figures from the FTA estimate that every penny of fuel duty costs commercial vehicle operators £120 million a year, and a 3p per litre cut would have saved around £350 million a year for an industry that all British businesses rely upon. As founding members of the pressure group FairFuelUK, both the FTA and the RHA have been campaigning for this small cut in fuel duty and, as part of its pre-Budget submission, the FTA asked the Chancellor to consider the economic benefits that could be delivered by further development of the government’s approach to fuel duty. Quentin Willson of FairFuelUK said:

“The Treasury now has five years of evidence to prove that keeping fuel duty low has helped improve GDP, stimulate economic activity and actually improve tax receipts. The Chancellor knows that low transport costs have had an enormous economic benefit to the UK over the last five years.”

Industry currently pays around £7 billion annually in duty and an increase of just one penny would add £470 a year to the cost of running a 44-tonne truck, which would have a huge impact on transport operators, many of whom would have no possibility of passing on the extra costs.

Away from fuel duty, the Severn Crossing toll has also been of keen interest to many in the freight and logistics world and so to reduce costs for businesses and families in Wales and the South West of England the government will halve tolls on the Severn River Crossings, from 2018, once the Crossings are in public ownership and subject to public consultation. Alongside this, the government will review the case for free-flow tolling on the Crossings. The Severn Bridge tolls are the most expensive in the UK, costing £6.60 for a car, £13.20 for a van and £19.80 for a coach or lorry.

It is predicted that there is likely to be an outstanding debt of approximately £50 million attributable to the bridges when they revert to public ownership in two years’ time. The FTA described the move to cut costs for motorists and hauliers as step in the right direction, but Ian Gallagher, FTA Head of Policy for the South West and Wales, remained cautious saying:

“As always the devil is in the detail, the Chancellor has said that the tolls will be reduced when the bridges are in public ownership but this is subject to public consultation. If the Government must consult, this should be carried out prior to handover so that a reduction in charges is in place from day one. The FTA would urge the Government to look at starting the process of free-flow technology prior to the handover in 2018. Reducing the tolls will be a welcome shot in the arm for businesses and commuters who use the bridges daily, allowing businesses to invest in the things that matter such as new vehicles and staff recruitment.”

Looking to the North, Mr Osborne announced £300 million of funding for several transport infrastructure projects to support the vision set out by Transport for the North (TfN) in their Northern Transport Strategy. Accepting the recommendations from the National Infrastructure Commission (NIC) on northern connectivity, the government will use the multi-million pound funding to projects which include:

  1. Giving the green light to High Speed 3 between Leeds and Manchester, committing to reduce journey times to around 30 minutes, in line with the recommendation by the National Infrastructure Commission. £60 million will be provided to develop plans for both the Leeds-Manchester route by 2017 and to improve transport connections between cities of the North,
  2. Accelerating the upgrade of the M62 to a four-lane smart motorway. The government will provide an extra £161 million on top of the existing road programme to bring forward by 2 years the upgrade between junction 10-12 Warrington to Eccles, and to accelerate work on junction 20-25 Rochdale to Brighouse,
  3. Developing the future transformation of east-west road connections, including a new Trans-Pennine tunnel under the Peak District between Sheffield and Manchester, as well as options to enhance the A66, A69 and the north-west quadrant of the M60. The government will allocate £75 million, including to develop a business case for these schemes by the end of the year,
  4. Accelerating the development of other critical road projects in the North, including Lofthouse and Simister Island junctions, capacity enhancements to the M1 at junctions 35a-39 Rotherham to Wakefield, and delivering on the commitment to begin upgrades to the M56 at junctions 6-8 south of Manchester in this Parliament,
  5. Improving the North’s major rail stations. To take forward the commission’s recommendations, the government will allocate a further £4 million to support the development of High Speed 2 Growth Strategies for Manchester Piccadilly, Manchester Airport and Leeds stations.

Down south, the government gave the green light for Crossrail 2 to proceed to the next stage, allocating a contribution of £80 million to fund the its development, and asked for Transport for London to match that contribution to ensure that the project can be fully developed. The proposed Crossrail 2 route will connect South-West and North-East London, increase tube capacity and reduce the pressure on Victoria and Waterloo stations.