HGV taxes need to rise by 50% to cover their damage to environment

Taxes on heavy goods vehicles (HGVs) would have to rise by 50% to cover their true environmental impact costs, new research has suggested.

The findings are contained in a new report from the Logistics Research Centre* at Heriot-Watt University, which examined the extent to which lorries in the UK cover their external costs - such as their wider environmental and congestion costs.

The analysis focused on three types of cost: environmental costs (climate change, air pollution, noise and accidents), congestion costs and infrastructure costs. It found that the total costs attributable to UK-registered heavy goods vehicles (HGVs) in 2006 were £7.1bn and possibly even higher (£7.6bn) if the worst case scenario were employed.

The researchers reported that HGV taxes covered about two-thirds of these costs, with lighter vehicles covering just 55% of their allocated costs and the heaviest rigid vehicles covering 79%. Overall, the analysis suggested that taxes on lorries would have to rise by around 50% to fully cover their infrastructural, environmental and congestion costs.

However, the researchers did qualify their findings by saying that when congestion costs were excluded - an issue which operators might suggest was beyond their control - the lorries more than covered their other costs. They also pointed out that Britain was already much closer to full ‘internalisation’ of the costs for road freight than most other EU countries and that raising taxes above current levels would further disadvantage UK operators. Foreign-registered vehicles avoided paying for their impact by purchasing their fuel more cheaply in other countries, they added.

They also remarked that the gradual upgrading of lorry fleets to higher Euro-emission standards and steady improvements in fuel efficiency would reduce air pollution costs. On the other hand, increases in the social cost of carbon and in the level of traffic congestion would have a counteracting effect, they concluded.

Meanwhile, Scala Consulting plans to conduct new research in conjunction with retailers and food manufacturers to assess food and drink supply chain efficiency and measure the impact of the supply chain on the environment. Initially the work will concentrate on measuring key indicators for transport, but this will be extended to cover the whole supply chain.

A pilot survey is planned before the end of the year to enable companies to test the models and concepts that have been developed by earlier workshops involving the firms.

“We believe this is one of the key issues facing supply chain and logistics operations,” said John Perry, md of Scala Group. “The support we received from industry … has convinced us of the need for an industry-wide programme to identify and benchmark supply chain environmental efficiency indicators.”

*Internalising the external costs of road freight transport in the UK​ by M. Piecyk and AC McKinnon.