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Cut UK diesel duty by half

ahead of haulage market liberalisation next year says FTA. The Freight Transport Association is calling on the Government to halve UK diesel duty ahead of European Parliament plans to begin liberalising Europe's road freight market from 1 January 2009.

Yesterday, the European Parliament voted on Commission proposals to free up the rules on cabotage journeys – domestic journeys made by a foreign haulier in another member state. At present these are restricted to casual, or 'spot' work. Under Commission plans, contract work would also be possible under cabotage – albeit that the number of cabotage journeys in another member state would be restricted to a maximum of three in seven days, following a vehicle's arrival on an international journey. However, Parliament has gone further. It wants to see the Commission's proposals fast-tracked through and introduced from 1 January 2009. Cabotage restrictions would then be gradually lifted to a maximum of seven journeys in seven days from 2011, with full liberalisation from 1 January 2014.

Currently diesel duty rates in the UK are double those in the rest of Europe. The change in cabotage rules would allow foreign operators using cheap fuel purchased on the continent to bid for and win contract business in the UK. Whilst in the UK they would pay no fuel tax and no Vehicle Excise Duty. FTA calculates that foreign hauliers running on cheap fuel have an eight per cent cost advantage compared to a UK haulier, in an industry where profit margins are typically two to three per cent.

FTA's Managing Director Policy and Communications, James Hookham said, 'The Government has sat on its thumbs for too long, hoping that existing cabotage restrictions would sweep the fierce competition exerted by foreign trucks under the carpet. Under Parliament's proposals, high taxed UK hauliers will be exposed to the full force of foreign carriers using low-cost fuel purchased on the continent. UK carriers simply cannot compete against such a price advantage.

'The competitive landscape for haulage is about to change forever. As a result, the days of British hauliers paying the highest fuel duty in Europe must be numbered. The Chancellor has got six months to cut diesel duty to EU average levels of 25 pence per litre.'

The Freight Transport Association represents the transport interests of companies moving goods by road, rail, sea and air. FTA members operate over 220,000 goods vehicles – almost half the UK fleet. In addition they consign over 90 per cent of the freight moved by rail and over 70 per cent of sea and air freight. FTA's website can be found at www.fta.co.uk

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