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The Freight Transport Association (FTA) has presented the Treasury with a series of what it describes as "practical options" for decoupling fuel duty for HGVs from that for other road users. The trade association commissioned PricewaterhouseCoopers (PwC) to develop key ideas to lower fuel duty in the UK, taking it from the current level of 50p/lit closer to the average EU rate of 25p/lit. The four  options considered by the study are:

• Offering a rebate of 25p/lit for UK fuel purchased for HGVs of 38 tonnes and above. Self assessment would be required, with quarterly VAT returns.
• Giving HGV operators access to 'blue diesel', taxed at the average EU rate.
• Basing a rebate not on fuel use, but on the distance an HGV travels in the UK.
• Introducing a fuel tank fill restriction for all HGV hauliers. When entering the UK, a maximum of 100 litres of diesel would be allowed, to ensure that UK fuel will have to be purchased for the journey.

James Hookham, director of policy at the FTA, tells CM: "We are putting the FTA money behind a rebate based on distance travelled. The mileage could come from tacho records or from Vosa at the annual tests." On the net cost to the Treasury, Hookham says: "The £1bn bill is not as big as might be presumed. The less tangible benefits are more British employment, more consumerism and less dole or benefits to hand  out."

With the EU intending to relax cabotage rules, Steve Best, transport clerk for Heritage International Transport, believes the best option is to impose a cost on foreign hauliers entering the UK, in the same way that the majority of western European countries already do. The Treasury was not available for comment.

The relaxation of cabotage restrictions will be discussed by the European Transport Council on Friday 13 June. Transport Minister Rosie Winterton will oppose the EU's intention to lift all restrictions on haulage by 2014. Potentially from 1 January 2009 a foreign vehicle will be undertake three domestic journeys in seven days and from 2014 there would be no cabotage restrictions at all.

Hookham comments: "There could be a free-for-all from 2014 and that is a frightening speed and pace. I think there is a real danger that these European hauliers could make British retailers an offer they can't refuse." In order for the haulage industry to survive, the government must reduce the fuel duty of HGVs by 25p/lit before any restrictions are lifted, he adds.