The July 2008 fuel protest
What’s the planned protest?
A two-pronged approach: a convoy through London on Wednesday 2 July starting at the A40. This will be followed by a mass lobby of parliament.
Will there be refinery blockades?
The organisations involved rule this out on the grounds that it’s illegal. However, that’s not to say rogue protestors not connected to the organisations involved could at some point attempt to take matters into their own hands.
Who are the protestors?
A mixture of several organisations: Wednesday’s protest was originally organised by pressure group TransAction – a loose collective of hauliers that was behind some of the protests in 2000 and the two demonstrations in April and May this year. However, since it was first suggested the Road Haulage Association has come on board as has the Transport Association, which represents around 60 of the biggest family-owned haulage companies in the country. The other industry body, the Freight Transport Association, has been conducting its own campaign and dialogue with the government and does not favour direct action.
What are they upset about?
The simple answer is the price of fuel. This has soared by over 40% the last 12 months from 76p/lit this time last year to an average of 106p/lit per litre now. Although clearly this has gone up across the world the UK government has exacerbated the problem with a particularly high tax take – 50p on a litre of fuel. Apart from the Netherlands we pay the highest fuel tax of anywhere in Europe. The government is still planning to add another 2p of tax to a litre of fuel in October.
Can’t hauliers get their customers to pay the increases?
Some can, some can’t. Generally the more sizeable businesses will have what are known as fuel escalators built into their contracts so that when the price of fuel goes up, their rate goes up too. However, for those at the smaller end or working on a casual basis it is much harder to get customers to agree to the introduction of either fuel escalators or rate rises. Additionally customers have their own cost pressures too – and they may not be in a position to sustain constant price rises any more than the haulier can.
Ultimately cost rises are reflected in the price the public pays for goods in the shops too – between 10-15% of the cost of anything in the supermarket is taken up by distribution costs and a 10% rise in the price of fuel equates to an extra 3% of transport cost.
What has the price of fuel elsewhere in Europe got to do with domestic transport?
Because fuel is still relatively cheap on the continent it is possible for foreign vehicles to come to the UK with a full tank of fuel and undertake what’s known as cabotage – intra-UK journeys at a much reduced price. Although this work is currently limited to a temporary basis, foreign vehicles have a wider ‘footprint’ in that they distort the market by depressing prices. An additional concern is the fact that foreign trucks, particularly those from Eastern Europe, are frequently found to be in a worse condition than those from the UK and their drivers more likely to be breaking the stringent hours regulations that govern the sector, putting public safety at risk.
To compound the problem the EU wants to liberalise the haulage market in the future, allowing hauliers from any country to work in the UK for an indefinite period.
In a recent piece of research for the FTA it was found that apart from Holland, UK hauliers had the highest operating costs of anywhere in Europe.
What are the protestors’ demands?
First and foremost is that the government cancel the fuel duty rise planned for October.
Secondly they want the government to give the industry an ‘Essential User Rebate’ – i.e. to lower the duty paid on fuel used by road hauliers, recognising that they provide an essential service to the country. This would be similar to the tax break enjoyed by farmers on red diesel. Ultimately there needs to be a decoupling of the way the haulage industry is taxed from the rest of the motoring population.
At the same time the RHA has sponsored an SNP amendment to the Finance Bill that proposes the introduction of a fuel duty regulator, so that when the price of fuel rose beyond a certain level, the rate of duty came down, effectively capping the price.
And what’s the government position?
Officially it is still pressing ahead with the October duty hike, although most observers believe this will be postponed. However, the government is widely recognised to be in a financial mess and the Treasury is loath to forfeit any revenue. FTA estimates that if the 2p/lit does not go ahead then the government will miss out on some £2bn of revenue. Equally it is pursuing a green agenda and because all motorists pay the same tax on fuel it feels that if it cuts fuel taxes it is sending out the wrong message about car use.
It is also insistent that the industry become more efficient in order to maximise its profitability. It says that extra resources are the answer to illegal foreign operation rather than any form of charging.
The government would also like to see a modal shift to rail.
What’s wrong with rail?
Put simply, it doesn’t work for the majority of freight. Even if the infrastructure was there to cater for a massive increase in the amount of goods transported by rail, the end journey would still need to be performed by a truck. Think about where your nearest railhead is...