Laurie Dealer's budget for road transport
Road transport needs a cut in fuel duty, private investment for roads, mileage tax and Euro-6 incentives to ensure it survives, says Laurie Dealer.
Alright, it’s that time of year, the Red Briefcase gets dusted down and transported to the Commons from Number 11, probably not at a competitive rate or with a home delivery company. Usually there is 2p on a pint, 3p on spirits, 10p on fags and some conciliatory measure for pensioners to turn on the heating without fear of draining their hard-earned resources. This year, perhaps more than any year before, it is road transport that needs conciliation from the Chancellor.
Ignoring rumours and likely outcomes, Laurie Dealer has listed a please-can-we-have list that would help road transport and the wider economy alike.
First, make Corporation Tax more competitive. This alone can attract more companies to the UK and provide more opportunities for the British workforce, including manufacturing.
Second, speaking of which, manufacturing and the small and medium sized enterprises need an education system (including higher education) geared towards its needs and not designed specifically for the affluent. Get rid of loans altogether, and reintroduce grants and allow students to make up the shortfall in cash by getting part-time work so the transition from school to university to work is more seamless. And do not remove vocational degrees in favour of old-school English and History degrees. (Makes my blood boil, especially as all those who introduced loans received a free education…)
Third, reintroduce the 40p tax rate for people who earn more than £150,000 a year. History has taught us that we get more by taxing this group less. It was estimated that only 320,000 people in 2010 earned that much or more, so a better rate should let this number grow and they’ll pay more. Mind you, while we are at it, remove the 50% Council Tax rate for second homes.
Fourth, reduce fuel duty. There is a popular misconception in road transport that its only hauliers that are affect by high fuel prices. The truth is that everyone is hit by high fuel prices. The majority of hauliers pass on fuel costs to their customers, who in return pass on the cost to their customers, and that is the likes of you and I. High fuel prices affect the rural communities even more as they have further to travel, and perhaps the best example is the Scottish 5p-per-litre fuel discount scheme that excluded hauliers. Laurie Dealer believes he has the answer.
Fifth, replace the road tax system (and eventually fuel duty) with a mileage tax. This means those that do high mileage per annum would be charged more than someone who does low mileage. It echoes fuel duty, in so much that the more fuel you buy the more tax you pay.
By introducing this scheme you can layer it and target those who are wanton rather than have everyone on a level playing field. For example, a 1.1-litre petrol car doing 5,000 miles a year would be charged at a lower rate per mile than someone driving a 3.0-litre petrol car also doing 5,000 miles a year. You can exponentially charge for all sorts of vehicles by putting them in specific brackets and introducing mileage categories.
Commercial vehicles can be charged for the work they do and the same system can be applied for vehicles coming into the country from Europe. Give them a voucher on entry for 500 miles and make them pay fines if they exceed it. A proper road charging system would require proper capital investment to introduce but it would curb excessive mileage and make everyone pay their dues.
This can be monitored through the MoT network, and the system put on the same database as the Police use for insurance and road tax. Anyone caught abusing the system goes to jail.
Sixth, incentives for Euro-6 technology. This next emission level is set to be more expensive, heavier vehicles reducing payload and no better on fuel. It needs an incentive, any incentive, to make hauliers choose it because right now there is no reason what so ever.
Finally, private investment of road infrastructure. The Midlands Expressway isn’t a stand up example of how it should be done and how to charge, however, it does open the door. A new route from Birmingham to Manchester, a proper Manchester by-pass connecting east and west without junctions for local towns would do it, and alternative routes from London heading north and another heading west are also required. A two-lane motorway for commercial traffic with a few junctions taking traffic out of London supplanting them in the regions would suffice. And a lot of people would pay for such a route if it genuinely saved time and money.
Don't leave your Euro-5 truck purchase too late, you'll pay the price, warns Laurie Dealer
In life there are times when you have to act and if you are a haulier thinking about new trucks then today is a time to act.
Euro-6 emission levels will come into effect on 1 January 2014. That’s right, you have less than 19 months to strike a deal to replace your fleet with cheaper Euro-5 proven technology. The later you leave it the more it will cost.
The best way to describe it is American Calvin Brock’s analogy after he was beaten by Ukrainian Wladimir Klitschko for the latter’s International Boxing Federation Heavyweight Title in 2006. As the fight entered the seventh round the champ landed a right hand dropping Brock for an eight count before the referee stepped in.
Afterwards Brock said: "I saw the punch coming, but I couldn't react fast enough.”
Well, Euro-6 is coming and when it lands on 1 January 2014 it’ll be painful; a 10% hike in list price, a heavier driveline, and many believe a worsening fuel return (although it’s yet to be proven either way). Essentially you are paying more for less.
Employees from sales departments at all the truck manufacturers are on the case offering aggressive pricing agreements for one and two year deals to encourage operators to spend. Now, simply because time is ticking, you are looking at best at a one year deal with a second sale in 2013 to ensure you meet Euro-6 without the requirement to replace the fleet for at least another five years.
Word is Daf, MAN and Mercedes-Benz are shifting trucks at cost to generate used stock come 2014 but prices will start to rise exponentially as the deadline nears. A truck sold for £90,000 today could be 5% more expensive this time next year.
How the next 18 months will pan out is anyone’s guess, but Laurie Dealer thinks the following scenario won’t be far from the truth.
- April 2012 to September 2012; operators will be encouraged to order stock now, even to replace the entire fleet, and spread it over six moths or a year to ease the burden on capital expenditure. Interest rates will be friendly, fixed buy-backs on the up
- October 2012 to December 2012; the message from the OEMs will be clear, if you don’t order now then you might well miss the boat. Production will be increased to meet the Euro-5 demand across Europe, however OEMS will offer a final operator-friendly deal across Europe to take up the final allocations
- January 2013 to June 2013; OEMs will start to ramp up the asking price of a Euro-5 as available orders start to dry up – operators won’t be happy but they can’t say they haven’t been warned. This will force the hand of operators and close the price gap between a Euro-5 truck and a Euro-6 truck
- July 2013 to 1 January 2014 deadline; order books will begin to close with those willing to pay the most getting the precious few left available. OEMs will be at capacity and only derogation (you can sell 20% of the last year’s trucks during the next 12 months) will hamper orders for Euro-6
Operators should know by now that the punch is coming, the trick is to avoid it or end up paying the price like Calvin Brock.