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The Lorry Road User Charge or LRUC was a form of distance-based road pricing which the Labour government proposed for HGVs in 2002 and was intended to take effect in 2008. The idea was to charge HGVs for use of UK roads depending upon distance and the time at which the journey took place. Its aim was “to ensure that lorry operators from overseas pay their fair way towards the cost of using UK roads”. This was intended to address the problem of foreign hauliers paying low amounts of fuel tax abroad and so enjoying a competitive advantage over domestic hauliers while not contributing to the costs of UK infrastructure.
The initial plan saw foreign hauliers paying around 15p per kilometre, fuel duty aside. This would have raised an extra £139m annually for the UK Exchequer. The scheme would have then rebated UK road transport operators to the tune of £3bn through off-setting tax cuts. This was different in principle to the European road tolling schemes which were being developed which intended to raise revenue from domestic as well as foreign traffic.
The Freight Transport Association and the Road Haulage Association worked closely with government on the LRUC and supported the principles of the scheme. LRUC was seen as the best chance for the UK road transport industry to achieve “a level playing field” free from the unfair competition implicit in Continental Europe’s lower fuel taxes. It also finally broke the link between the road taxes paid by HGVs and those paid by motorists, establishing an official separation between essential and non-essential users of the roads.
However Alan McKinnon, professor of logistics at Heriot-Watt University, published findings which suggested the LRUC was a hugely complicated system which would cost many times more to administer than it would raise in revenue. He described the system as a “sledgehammer to crack a nut”.
The trade press, notably Motor Transport and Commercial Motor, both followed McKinnon’s work with interest and found in it evidence to support a growing suspicion that the IT system needed to run LRUC was well beyond the capability or resources of the government. The FTA and RHA also eventually started to voice concern but, even at the last minute, government officials assured them the scheme was safe.
The Transport Select committee’s study into LRUC found that “ultimately the sums may not stack up. The government should be wary of committing itself to implementation of a potentially very expensive and overly-sophisticated system”. The government’s response was made clear when then transport minister Alistair Darling pulled the plug on LRUC in a sudden and unexpected announcement. The government had realised that the scheme would not be financially viable in that form and would look instead at alternatives, namely a long term study in road pricing for all traffic.
The industry, and in particular the trade associations, were left reeling by the announcement. Much work had been invested into a scheme intended to solve urgent problems and nothing useful was being offered in its place. The FTA and RHA subsequently announced a joint study to be run by Robbie Burns called the Burns Freight Taxes Inquiry to investigate the effects of high fuel duty and foreign competition on the UK road transport industry.
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