Road Haulage Association

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RHA campaigns: a long agenda

By the time you read this we will probably know – or have a good indication – what the Chancellor is doing about fuel duty. And I can only say that a tremendous amount of work has been done to carry forward the great campaigning successes of 2011 into this year.

Whatever happens, we must not lose sight of the fact that the RHA’s involvement and support for FairFuelUK has been a resoundingly effective political lobby, with a number of proposed increases in duty being dropped or postponed and a real reduction being achieved.

But our campaigning is not restricted to fuel duty – important thought that undoubtedly is. In fact, the RHA has a very long list of issues that are being tackled and we are making progress on most fronts. Space does not allow me to mention everything, nor to give full details of the topics that are referred to. Members are kept up-to-date on progress in a variety of ways, including our on-going programmes of members’ meetings around the country, e-newsletters from both the regions and Weybridge and, of course, ROADWAY. I urge all members to read as much of this as possible, so you are kept in the know. In no particular order, here are some of the things we are dealing with, together with a short note of the current situation:

On lorry charging we are supporting the latest proposals: indeed, we would like to see them brought in sooner rather than later. We know this does not fully resolve the ‘level playing field’ but it is a step in the right direction.

In London, we are working with Transport for London (TfL) to ensure that members’ interests are taken fully into account in planning for the Olympics and we believe that everything possible is being done to tackle the obvious challenges we will face during the coming summer.

We are also working with TfL to address the real difficulties that arise from trucks sharing congested streets with cyclists. The tragic loss of life that can occur seriously affects everyone involved, and we hope that all interested parties will work together to find effective ways forward.

Also in London, we are considering if and how the FORS scheme might be developed, without simply adding to the administrative burden that all hauliers face.

Another problem being addressed is the wide-ranging area of driver skills, training and recruitment. This is a longer term issue in some respects, as the fact that many more drivers are leaving the industry than are passing LGV tests will not have an immediate impact on members, but when economic growth returns, there is every chance that recruitment will not be simply a matter of waiting for drivers to come knocking on your door.

Finally, there are two issues in the recovery industry that are being tackled: hard shoulder safety and statutory fees. Neither is going to be resolved overnight, but we will make sure that progress is made.

Fuel Alarm Bells Ringing

The combination of a planned fuel duty increase in August and inflated crude oil prices – resulting from tension in the Middle East – has set the alarm bells ringing…Again.

Headlines warn that fuel prices could hit £1.65 a litre within weeks, with the potential of a three pence duty increase to follow in August.

The price of crude oil has been pushed up thanks to our beloved financial types, gambling on the price of a barrel increasing further. The problems in the Gulf with Iran could mean that our ‘friendly’ supplies could be curtailed because of Iran’s influence over the Strait of Hormuz. 20% of the world’s oil passes through the 53km wide seaway. The speculators and hedge funds are buying up crude like there is no tomorrow; in the hope they can profit once the price increases further. That causes shortages, which inflates the price. Have you seen all the oil tankers parked off the coast of South West England and Wales? All full of oil waiting for the price to go up. What this means to you and me is for every £1.26 increase in the price of a barrel of crude, we pay an additional one pence per litre at the pumps. A far more volatile influence than planned duty increases.

Almost 60% of the pump price in the UK goes to the Chancellor and your association, along with FairFuelUK has been doing a great job lobbying to ensure he doesn’t get any more.

But the problems facing diesel and kerosene consumers are far more wide- ranging than gambling city types and a government in love with easy revenue from fuel duty.

But there is another and possibly more significant threat. You all know that there is a noticeable price difference between petrol and diesel. In the main it is to do with refining capacity. Even if we can get our hands on the crude oil, Europe and the UK’s ability to turn it into diesel cannot match demand. And the major oil companies simply aren’t interested in changing that. Why? Because while it costs us more to buy imported diesel, it costs them less if it is produced and refined outside Europe, enabling them to make bigger margins.

40 years ago the UK and Europe was fuelled largely by petrol. Our North Sea crude is perfect for producing it and so our refineries were built to service an overwhelming demand for it. Since then diesel has become the fuel of choice for 50% of car and 100% of commercial vehicle users and we simply don’t have the capacity to refine the quantities required. A new crude oil cracking tower costs around £500 million and as there are limited margins in refining, the oil companies and refinery owners either aren’t prepared to, or can’t afford to invest.

Add to this the fact that oil refineries are closing – Europe lost several in January as a result of the collapse of Petroplus – and matters just get worse.

Whether the government can do anything about it is a moot point. Yes it could soften the impact of inevitable fuel price increases over the next few years by reviewing the amount it taxes the sale of fuel; after all there has to be a limit how much it can and should take. But many would argue that the damaging increases – in diesel prices especially – would not be a result of a government’s actions, but from global influences and an acute lack of domestic refining capacity.

Thanks to the slow down in the U.S and European economies the demand for diesel has fallen. The BRIC nations are using up the global surplus to fuel their rapidly expanding economies. But once the demand for diesel returns in the West to pre-recession levels – which it eventually will – this combined with increased demand elsewhere in the world will result in shortages, compounding our problems even further.

Maybe the government can come up with a way to combat this threat. I hope so because by the end of the decade running a diesel powered vehicle in Europe could quite feasibly become the preserve of the rich. And everything we buy will be much more expensive or even unavailable because of the cost of delivering it.

Five pence relief – the war on fuel duty goes on

The price of fuel you are buying today is five pence per litre lower than it might have been due to the campaigning work of the RHA and its partners through FairFuel UK.

This saving is because of the cancellation of the ‘escalator’ of one pence, the postponement of an inflation rise of three pence and the reduction in duty level of one pence. It is a great victory for the industry.

It has to be said, though, that the price of fuel is still high and might go higher, and the rate of duty in the UK is still much higher than most of Europe, so this represents the winning of a battle – the war on fuel duty goes on.

One central feature of the FairFuel UK campaign was the number of MPs who signed up to support us (more than 140) and that was largely as a result of individuals contacting their MPs demanding action. The government clearly felt enormous pressure which led them to act. Having built this firm foundation of support in Parliament, we must build on it and keep the momentum going. RHA members are rightly sceptical about letters to MPs, but I have an excellent example of why this is so important. At the height of the campaign to canvas MP support, I wrote to an MP who I know has an interest in the road haulage industry setting out the RHA’s concerns. His reply was: “I’d be happy to reply in detail about my views on this (or any other issue for that matter) to any member of the RHA who lives in [the constituency]. The best way to get answers from MPs is not for us to receive emails like the attached but to hear directly from our constituents.” Needless to say, we have arranged for a number of his constituents to write to him.

It is also important to stress that any members willing to put pressure on their MPs will get full support from the RHA. Our staff will help members, including attending meetings and preparing briefing papers. You are not alone and the combined strength of the RHA and its members can become a powerful political voice in Whitehall and Westminster.

Yes, the price of fuel is still high and causing problems for many members and their customers. Yes, the level of fuel duty is still too high, and is the primary cause of the high price of diesel in the UK. And yes, the price of fuel is not the only issue the RHA must tackle, but at long last we have implemented a concerted and effective, industry-wide campaign and ensured that the government doesn’t just listen, it acts. The fight goes on!

April 2011  RHA Chief Executive – Geoff Dunning

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