2012: Should congestion charges replace fuel duty?

Jakes de Kock
Sales and Marketing Director at The Fuelcard Company
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Post date: Tuesday, 3rd January 2012

It has been an eventful 12 months for the fuel duty debate. The FairFuelUK campaign to scrap fuel tax rises surged to the forefront of national news, gaining the 100,000 signatures it needed to prompt a debate in parliament. The government scrapped two successive fuel tax hikes for the first time and introduced a fair fuel stabiliser, indicating that they have finally realised the punishing effect fuel prices are having on motorists and particularly the haulage industry. And Lord Mirrlees turned the entire debate on its head, recommending that fuel duty be scrapped entirely and replaced with congestion charges.

However, although a lot appears to have happened, the actual impact of these actions on the amount the industry pays for fuel has been minimal. Yes, the fuel duty freeze will bring some immediate relief both to family car drivers and those who drive for a living, particularly those small and medium sized haulage businesses whose survival is hanging in the balance. But aren’t we just delaying the inevitable? January’s rise would have cost the industry around £325 million, yet surely this is a burden we’ll still need to carry in nine months time?

While we’re relieved the Chancellor has steered us out of immediate danger, getting the UK back on the road to recovery requires a longterm fuel duty strategy. The fêted Fair Fuel Stabiliser was eradicated virtually immediately following the steep rise in commodity prices. We need a system which will have a real impact on fuel prices.

It is worth looking closer at Sir James Mirrlees’ proposed controversial recommendations to replace fuel duty with congestion charges. This proposal could revive the transport industry, reduce city centre traffic and boost the economy by getting Britain moving again.

A congestion charge scheme could also be a much fairer system of taxation than the current arrangement which unfairly penalises those who drive for a living. Levying the same tax from all drivers, whether they are ‘choosing to drive’ in their private lives or providing an essential service for the country by transporting goods and materials from place to place, is totally unfair. A system of congestion charging would level the playing field and apply to all motorists travelling in a particularly busy area – likely to be in and around city centres – rather than being based on distance covered, as with fuel usage, which places a heavy burden on transport companies. Congestion is the biggest problem we face on UK roads, so surely it would make more sense to levy tax on this area rather than punishing companies who are simply doing their jobs.

After all, the congestion issues we are facing on UK roads are not caused by vans and HGVs, but by private motorists who insist on using their vehicles for short local journeys, even when there is a perfectly good bus or rail service in place. Commercial drivers, and those who live in rural areas, do not have the luxury of choice but rely on their vehicles to get around and yet they pay more in fuel duty. A system of congestion charging would redress this imbalance.

While it’s great that the fuel price issue is finally moving onto centre stage, it’s important that we maintain pressure and do not let the issue be side-stepped by government again. One way or another, fuel duty must go, whether that means tax breaks for commercial drivers or implementing a system of congestion charging. What is certain is the current situation is unsustainable and government is shooting itself in the foot by failing to address fuel prices. Ministers want economic growth, yet they’re shackling the fleet industry through unsustainable taxation which is forcing businesses to turn down work because the high cost of fuel means there is no profit to be made.

You could say 2011 was the year that disaster was averted, but 2012 must be the year of the long-term fuel strategy. Without support it will not just be the transport industry that suffers but every single household in the UK which would see the price of everyday goods rocket. I would strongly urge the government to listen to the needs of the transport sector before it’s too late.

This article first appeared in Freight Industry Times, Winter 2012. To read the entire publication, click the ebook. 

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