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Railwatch 087 - March 2001

Facts of road-rail costings

RDS member David Bird was unhappy when he read MP Donald Stewart's views on the fuel crisis. He wrote the following letter to set the record straight.

Dear Mr Stewart

In your article in WestWord you make reference to "hard pressed motorists, hauliers and farmers". How do you justify the term "hard pressed", bearing in mind the following points?

The £23billion tax taken from motorists is far less than the estimated £44-51billion which road transport costs the environment, economy and society. The £44-51billion figure was calculated by leading environmental economists (Maddison, Pearce et al. Blueprint 5: The True Costs of Road Transport 1996) in 1994 prices.

It includes £19.7billion for the health costs of air pollution (which the Government says leads to up to 24,000 premature deaths in the UK every year) and £19.1billion for the cost, calculated by the CBI, of congestion.

Government figures show the overall cost of motoring was the same in real terms in 1999 as in 1974 (DETR quality of life counts 1999). During this period, the cost of train fares rose in real terms by 53% and bus fares by 87%.

The all-party House of Commons Environment, Transport & Regional Affairs Committee concluded in a recent report:

"We have not accepted the principal argument advanced by our witnesses from the road haulage industry, that fuel prices and vehicle excise duty are too high, and should fall. We believe that in the past haulage rates have been unrealistically low, and have not reflected the true costs imposed by the road haulage industry on our society.

"The real increases in fuel duties, although imposed too rigidly in the face of rising oil prices, have gone some way to creating a sustainable market in road freight transport.

"If our objective is a safe and clean road haulage industry ... then haulage rates must rise to reflect the true costs of freight transport." (House of Commons Environment, Transport and Regional Affairs Committee 15th Report The Road Haulage Industry para 109 2000)

The damage by road haulage to roads and the environment has recently been calculated by consultants NERA for the Government. Each five-axle 40-tonne lorry costs society £28,588 per year (NERA Lorry track and environmental costs - a report for DETR April 2000). The Freight Transport Association calculates that such a vehicle pays £25,500 per year in fuel duty and VED (From FTA website www.FreightTaxes.com). This is over 10% less than its real cost.

Road hauliers would not be helped by cuts in fuel duty either. Most contracts with big freight users like supermarkets require hauliers to reduce their rates if fuel or vehicle taxes are reduced. Cutting fuel duty for road haulage would also undermine the Government's target to boost rail freight by 80 per cent over the next 10 years.

Cutting fuel tax has a direct effect on traffic growth. By making driving cheaper, it increases car use. Scrapping the fuel duty escalator, together with measures to improve the fuel efficiency of cars, could increase traffic growth from 28% between 1996 and 2011 to 35% between 1996 and 2010 (Commission for Integrated Transport National Road Traffic Targets para 2 November 1999). Further cuts in fuel tax can be expected to have a similar impact, generating even more traffic.

This would undermine John Prescott's key promise that the number of car journeys would fall during the first term of a Labour Government (on 6 June 1997, John Prescott told The Guardian: "I will have failed if in five year's time there are not many more people using public transport and far fewer journeys by car. It's a tall order, but I urge you to hold me to it." )

Farmers already receive a substantial subsidy on diesel fuel used on farms. Red diesel is taxed at only 3 pence per litre, compared to 48 pence per litre for standard diesel (Labour Party Labour's Fuel Policy briefing 15/09/00). I would be very interested to hear your response, and also your comments on the cuts in excise duty for the largest lorries and the forthcoming increase in allowable GVW to 44 tonnes.

EWS Railway states that the increase in lorry weights to 44 tonnes may cost it 20% of its business) I look forward to your reply.

Yours sincerely

David Bird Djbmallaig@aol.com

Mr Bird has so far received no answer.

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