Something very strange has happened. You would have thought that the recent sharp rise in fuel prices would have led to a storm of protest from hauliers. But there are no protesters blocking Park Lane, no demonstrations outside Parliament and no angry headlines in Motor Transport. One reason is that fuel tax is rising only by inflation - back in 2000 it was rising by 6% plus inflation each year under the fuel duty escalator. This time the rising fuel price is due to the market. Of course there is the possibility that hauliers are finally passing at least some of the fuel price increases on to their customers, thus enabling them to stay in business. Equally some would claim that so many haulage companies have gone bust and the remainder have either been swallowed up by giants that can twist their customers' arms or can get a good price because their rivals have disappeared.
But we should not forget the massive difference in fuel duty in the UK compared to the rest of Europe. That leads to a serious distortion in trade and the haulage industry suffers. Our new Prime Minister cranked up the fuel escalator to unbearable levels when he was Chancellor and the Conservatives say that cuts in fuel tax are not on the agenda because of the state of public finances. So don't get too enthusiastic about a reduction in fuel duty any time soon. One alternative is to charge overseas operators to use UK roads. Both the Conservatives and the government are looking favourably at this. In an ideal world it would make it less attractive for overseas hauliers to cross the channel. But bizarrely the amount we can charge under EU vignette rules is tiny. On the one side we are stuck with having to pay the highest fuel taxes in Europe. On the other side, we cannot set sufficiently high charges for overseas hauliers to use UK roads. Somehow we have ended up with the worst of both worlds. This is the core of the problem.
So here is a suggestion. Why don't we start with a new environmental tax? The UK government sets the level and all trucks in the UK - British or overseas - have to pay it, though it can be partly off-set by reduction in VED. Owen Paterson, shadow transport minister, reckons that tax on all trucks using the roads, might cost UK hauliers more but they would benefit as it would discourage overseas operators coming over here, reducing cut-price competition. He may be right as long as the cost of such as scheme does not outweigh the overall benefits it might just work.
A different idea comes from the IRU. Hubert Linssen, general delegate to the EU, told the Road Haulage Association conference that the UK's rate of fuel duty is scandalously high. He wants a harmonised rate of fuel duty set at E380 per 1,000 litres (see him speak at http://www.roadtransport.com/mtnews/). It is a great idea but unfortunately a non-starter there is no chance that the EU could agree a standard level. It would help us, but would mean some countries greatly increasing their fuel duty - a move sure to prove deeply unpopular. We have become used to Britain's high level of fuel duty. But the lack of protests does not mean that the issue has gone away. It encourages overseas competition and distorts trade. We must either reduce fuel duty for truck operators or charge overseas operators a realistic rate for using our roads. And we must do it soon, not after years of debate and reports.