Reforms to HGV Road User Levy Called For By Influential Lobbying Group

The Association for Consultancy and Engineering (ACE) has recommended government reforms to the HGV Road User Levy as a test case for a new dynamic tax for all road users.

The influential group published a report today outlining the need to reform road tax in order to mitigate a decline in income in the future.

The group’s plans are grabbing headlines as they suggest motorists might be charged different fees depending on their personal circumstances.

Importance of Roads

The report outlines the importance of England’s road network and highlights that there has been a reduction in investment since the 1970s, despite the road network continuing to be imperative to the economy.

According to a McKinsey and Company source referenced, the UK carries more fright per kilometre of motorway than any other country, apart from Japan which carries a similar volume.

Why Changes Are Need

Road taxes in the UK are currently collected via Fuel Duty, Vehicle Excise Duty (VED) and Heavy Goods Vehicle Road User Duty.

Over the coming decades these sources of revenue are likely to decline as electric and other alternative technologies reduce VED and fuel tax receipts.

The report argues that in contrast to this reduction investment actually needs to increase, otherwise there will be consequences both to our quality of life and the UK’s economic performance.

HGV Levy Reforms

The HGV road user levy applies to heavy goods vehicles (HGV) of 12 tonnes or more. The aim of the levy is to ensure large goods vehicles make a contribution to the wear and tear of the road network. The levy amount varies according to the vehicle’s weight, axle configuration and levy duration.

ACE believes that new technologies should make it possible to introduce a dynamic road user pricing scheme, removing the pay per day structure currently in place.  It suggests this could be based on distance, location, time of day, congestion CO2 emissions or vehicle type.

The argument is that this could then be used as a prototype for the wider enrolment of other non-freight vehicles operating on the road network. This would be a way of addressing any teething problems before a full rollout to teh entire population, ACE believes.

This is alongside other recommendations to reform policy to tackle congestion, increase productivity and develop a new National Roads Strategy.

The Report

So what are your thoughts? Would you welcome reform to the HGV Road User Levy? How do you feel about the transport industry spearheading a new dynamic approach to road taxation?

We welcome ACE’s sentiment, that the UK’s road network is of critical importance and that it needs a sustained increase in funding as we head into uncharted territory. But we question whether using the transport industry as a test case for a new dynamic taxation model is a good idea.

The transport industry is already under sustained pressure from policy decisions being taken by government to quickly phase out Euro 5 vehicles. We fear more tampering at this stage could increase the burden on an already strained industry already battling on number of fronts.

You can download the full report on the ACE website.