High diesel duty is crippling the UK's freight industry

Road hauliers in the UK, which pay twice the diesel duty of competitors in other EU Member States, are pressurising the government to ease the crippling effects of spiralling fuel costs. They have called for a reduction in diesel duty to the EU average of 25p/litre, rather than imposing a 2p increase as planned in October.

Following industrial action by small truckers in the UK recently, the Freight Transport Association (FTA), whose members represent almost half the UK road fleet, has called on the government to halve UK diesel duty ahead of European Parliament (EP) plans to liberalise Europe's road freight market.

The move comes at a time when new data for 2007 from the Department for Transport shows the number of foreign trucks entering Britain on international journeys reaching an all-time high of 1,719,000 - up 7% on 2006. By contrast, the number of UK registered trucks travelling abroad has reached a 14-year low of 400,000 vehicles. UK hauliers account for just 19% of international road haulage traffic between Britain and Continental Europe.

On a more positive note, the FTA welcomed the agreement reached at the EU Council of transport ministers last month. This will allow Member States to protect the interests of their domestic transport industry "in cases of serious disturbances of the national transport market".In effect, this would enable the UK to introduce legislation that would prohibit contract work from being carried out by visiting foreign lorries.

The FTA had feared these so called 'cabotage journeys' would inflict further damage to hard-pressed domestic hauliers.

The FTA argues that diesel duty rates in the UK are currently double those in the rest of Europe and that 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. While in the UK they would pay no fuel tax and no vehicle excise duty. The FTA calculates that foreign hauliers running on cheap fuel have an 8% cost advantage over a UK haulier, in an industry where profit margins are typically 2-3%.

But it may yet be a temporary reprieve. The EP has still to agree the changes and in the longer term is known to want full liberalisation of the cabotage restrictions.