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HC 480-i Published on 25 September 2012

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House of Commons

Transport Committee

Road freight

Oral and written evidence

3 July 2012

Jack Semple, Director of Policy, Road Haulage Association, Nigel Cook, Managing Director, Elddis Transport, Theo de Pencier, Chief Executive, Freight Transport Association, and Karen Dee, Director of Policy, Freight Transport Association; and Mike Penning MP, Parliamentary Under-Secretary, Department for Transport

Ordered by The House of Commons to be printed 3 July 2012

5 5

The Transport Committee

The Transport Committee is appointed by the House of Commons to examine the expenditure, administration, and policy of the Department for Transport and its Associate Public Bodies.

Current membership

Mrs Louise Ellman (Labour/Co-operative, Liverpool Riverside) (Chair) Steve Baker (Conservative, Wycombe) Jim Dobbin (Labour/Co-operative, Heywood and Middleton) Mr Tom Harris (Labour, Glasgow South) Julie Hilling (Labour, Bolton West) Kwasi Kwarteng (Conservative, Spelthorne) Mr John Leech (Liberal Democrat, Manchester Withington) Paul Maynard (Conservative, Blackpool North and Cleveleys) Iain Stewart (Conservative, Milton Keynes South) Graham Stringer (Labour, Blackley and Broughton) Julian Sturdy (Conservative, York Outer) The following were also members of the committee during the Parliament. Angie Bray (Conservative, Ealing Central and Acton) Lilian Greenwood (Labour, Nottingham South) Kelvin Hopkins (Labour, Luton North) Gavin Shuker (Labour/Co-operative, Luton South) Angela Smith (Labour, Penistone and Stocksbridge)

Powers

The committee is one of the departmental select committees, the powers of which are set out in House of Commons Standing Orders, principally in SO No 152. These are available on the internet via www.parliament.uk.

Publication

The Reports and evidence of the Committee are published by The Stationery Office by Order of the House. All publications of the Committee (including press notices) are on the internet at http://www.parliament.uk/transcom. A list of Reports of the Committee in the present Parliament is at the back of this volume.

Committee staff

The current staff of the Committee are Mark Egan (Clerk), Farrah Bhatti (Second Clerk), David Davies (Senior Committee Specialist), Tony Catinella (Senior Committee Assistant), Adrian Hitchens (Committee Assistant), Stewart McIlvenna (Committee Support Assistant) and Hannah Pearce (Media Officer).

Contacts

All correspondence should be addressed to the Clerk of the Transport Committee, House of Commons, 7 Millbank, London SW1P 3JA. The telephone number for general enquiries is 020 7219 6263; the Committee’s email address is [email protected]

List of witnesses

Tuesday 3 July 2012 Page

Jack Semple, Director of Policy, Road Haulage Association, Nigel Cook, Managing Director, Elddis Transport, Theo de Pencier, Chief Executive, Freight Transport Association, and Karen Dee, Director of Policy, Freight Transport Association Ev 1

Mike Penning MP, Parliamentary Under-Secretary, Department for Transport Ev 8

List of written evidence

1 Road Haulage Association Ev 14

2 Freight Transport Association Ev 15

3 Department for Transport Ev 19

List of additional written evidence

(Published in Volume II on the Committee’s website www.parliament.uk/transcom)

1 British International Freight Association Ev w1

2 Freight on Rail Ev w3

3 Federation of Small Businesses Ev w7

4 Douglas Piper Ev w9

5 Richard Powderhill Ev w11

6 Stephen Plowden Ev w12

7 Chartered Institute of Logistics and Transport in the UK Ev w13

8 PACTS Ev w20

9 Protect Kent – The Kent Branch of CPRE Ev w21

10 AXA UK Ev w22

11 Unite the Union Ev w23

12 Westwell Parish Council Ev w26

13 Transport for London Ev w27

14 Roger Sealey Ev w30

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Transport Committee: Evidence Ev 1

Oral evidenceTaken before the Transport Committee

on Tuesday 3 July 2012

Members present:

Mrs Louise Ellman (Chair)

Steve BakerJim DobbinJulie HillingKwasi KwartengMr John Leech

________________

Examination of Witnesses

Witnesses: Jack Semple, Director of Policy, Road Haulage Association, Nigel Cook, Managing Director,Elddis Transport, Theo de Pencier, Chief Executive, Freight Transport Association, and Karen Dee, Directorof Policy, Freight Transport Association, gave evidence.

Q1 Chair: Good morning and welcome to theTransport Select Committee. Could you give us yourname and the organisation that you are representingto help our records?Karen Dee: I am Karen Dee. I am Director of Policyat the Freight Transport Association.Theo de Pencier: I am Theo de Pencier, ChiefExecutive of the Freight Transport Association.Jack Semple: I am Jack Semple, Director of Policy,Road Haulage Association.Nigel Cook: Nigel Cook from a company calledElddis Transport. I am also the Northern RegionalChairman of the Road Haulage Association.

Q2 Chair: How would you describe the current stateof road freight transport? What do you think the mainchallenges are?Theo de Pencier: In many ways, the level of activityin transport has always reflected what is happening inthe economy generally to some degree, particularly inroad transport, as pretty much 90% of everything thatmoves from a manufacturer or distribution centre intoa retail outlet or manufacturing centre and so on goesby road. So it has been a difficult few years for theindustry overall.Those difficulties have been compounded by the factthat a lot of our input costs, particularly fuel of course,have been rising significantly faster than generalinflation. That has been the case for many years. Indifficult economic times it is very difficult to recoupthose increased costs through passing on the cost toyour customers. In essence, whether you are a largeoperator or, as many of our members are, own accountoperators—so they are not necessarily transportcompanies per se but they deliver and work on behalfof a manufacturing business or a retailer—they havehad a lot of pressure on either the margins they makeor the cost as a proportion of the selling price of goodsin a retailer or whatever it may be.Having got through a number of years, right at themoment I would say lack of confidence would be thestrongest characteristic of my members, whether theyare large retailers or more modest-sized businesseseither in manufacturing or transport. That is seen in a

Paul MaynardIain StewartGraham StringerJulian Sturdy

reluctance still to invest, with a fair degree ofuncertainty going forward. Also, probably, having gotto this point and operating in many cases at a lowerlevel of activity than they were back even in2008–09—and we saw a number of liquidations andinsolvencies, which are still a characteristic of theindustry—my smaller members or the ones that havegot to this point, if they operate in particular marketsectors, will just reflect how that sector is faring. Forexample, construction is difficult at the moment; othersectors are perhaps slightly more buoyant.There is one further characteristic I would mention.For me, a lot of our larger members, particularlyretailers, are less confident and optimistic than theywere certainly over the last few years. That isprobably the biggest change. It is not just the smalleroperators and members of FTA that are thinking theyare in for a very long haul of tough times. We alsosee it with our larger members at the moment as well.

Q3 Chair: Does anyone disagree with any of that, orwould any of you like to add any further points? I amlooking particularly at the current challenges that youthink the sector is facing.Jack Semple: I would echo everything that has beensaid and perhaps just add one or two other points. Wehave a long-term pressure on the industry. We areseeing consolidation at every level in the industry.There is an expectation that that consolidation willcontinue. We are seeing that the investment issue haspossibly been exacerbated by the change in capitalallowances by the Government at the end of this lastfinancial year. Driver wage increases, if they aregetting any increase at all, are running well below thelevel of inflation. Costs, other than fuel, are also goingup. There has been a very sharp increase since thestart of the recession in vehicle prices.We have seen several innovations from Governmentobviously. The longer semi-trailer trial has comethrough. We have a patchy picture for the driver CPC.Some operators are really getting to grips with it andmaking it benefit them; others are not because it is notseen as a good investment.

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Ev 2 Transport Committee: Evidence

3 July 2012 Jack Semple, Nigel Cook, Theo de Pencier and Karen Dee

In terms of the Department’s particular key issues,with the pressures on operators, compliance is an issueof very strong concern to members. We would be keento see the Department giving a clearer and differentfocus from what it has at the moment in that area.

Q4 Chair: Mr Semple, what do you mean exactly bythat? You want the Department to give it a differentfocus.Jack Semple: There are several areas where we wouldlike to see more evidence of VOSA activity. Inessence, it boils down to taking stronger, moreeffective and more visible action against thoseoperators who are seriously non-compliant.

Q5 Mr Leech: I would like to ask a question aboutroad safety. The Government are consulting on thepossibility of increasing the speed limit to 80 mph onthe motorways. Does the Road Haulage Associationor the Freight Transport Association have any viewon what impact that would have on safety on themotorways and safety for your drivers?Karen Dee: We are still in the process of looking atwhat the precise impact would be. Clearly it is not aspeed limit that would apply to most of our members,obviously, because we have a different speed limit. Isuppose there is an issue with regard to the differentialin the speeds and whether it will create morefrustration between drivers and lorries, which will bemoving that bit slower in comparison to the cars.

Q6 Mr Leech: Is there any attempt from the industryto argue the case for the speed limit to increase forhauliers to 70 mph so that there is the samedifferential?Nigel Cook: If I can comment on that as an operator,first of all, to run a current HGV at 70 mph wouldhave a significantly detrimental effect on fueleconomy. In the industry now we are seeing a lot ofoperators that have gone the opposite way. Althoughwe are basically limited to 56 mph, a lot of theindustry is running at a lot less. We run our fleet at 52mph because there is a significant fuel benefit, evenover 56 mph.Where there is potential to look at the speed limit onHGVs is on some of the A roads in the country. Icome from the north-east of England. We are notreally linked to the motorway network, unfortunately.The A1 north of Newcastle, for example, is a verygood road, but our HGVs are limited to 40 mph. Thereis an argument whether they should be running at 45or 50 mph, because you see a lot of accidents causedby car drivers getting frustrated and trying to get pastHGVs. The speed limits are very historic to when thebraking systems and technology in vehicles weren’tanywhere near as good as they are now.

Q7 Mr Leech: Are there a lot of operators that areputting speed restrictors on their vehicles to make surethat they are going below 60 mph?Nigel Cook: All vehicles have to have speedrestrictors by law, but, yes, we are seeing more andmore.

Q8 Mr Leech: What sort of impact is that having onsavings in fuel costs?Nigel Cook: It can be quite significant. Within ourown business it was in excess of a 5% saving on fuel.

Q9 Mr Leech: Is the requisite loss in time not seenas significant?Nigel Cook: There are certain operations that wewould have to look at doing slightly differently. Thefeedback from our drivers was that, initially, theywere very negative towards it, but now they find itless stressful because they are not sitting there tryingto get past that vehicle at 56 mph when they are alsodoing 56 mph. They find it a lot smoother and easierto drive and they are not braking as often. That is oneof the issues.Theo de Pencier: I would endorse the point that hasbeen made. Most of the big retailers now run at below56 mph, having maybe been at 56 mph for a spell aswell. It is exactly the same as Mr Cook’s comments.Most Tesco vehicles, for example, are running at 50mph at the moment. Sainsbury’s are very similar. Bigfleets, by and large, are looking for that optimum levelso that they can get as good fuel economy as they can,depending on the route and the type of work they aredoing. They also feel it will enable reliable journeytimes. Journey time reliability is significantly moreimportant than absolute speed.

Q10 Mr Leech: If a lot of hauliers are driving at 50mph, do you think it is really safe for the Governmentto be considering a 30 mph speed differential betweenhauliers and cars?Theo de Pencier: I don’t really have a strong viewon that.

Q11 Chair: Does anyone have a view on that?Jack Semple: I would make a brief point. At themoment trucks have to be regulated at no more than56 mph. A lot of firms like to have the choice as towhere to set their speed limits. 50 mph is at the lowend; 52 or 53 mph is common. I do know some quitesignificant- sized firms that choose different speeds fordifferent applications within an industry that is verytightly regulated on drivers’ hours. For some firms, 56mph is important because they have to get the jobdone within the driving day.

Q12 Steve Baker: On this point, do any of youreally—I will just try and phrase it in a more neutralway. Do any of you believe that the 70 mph speedlimit is widely obeyed?Karen Dee: For cars, probably not.

Q13 Steve Baker: No, it’s not, is it? On thisconversation about speed differentials, are we talkingin the abstract about what we would like to be true oris it reality? I think the truth is that cars are alreadydoing 80 mph.Theo de Pencier: Where it does impact oncommercial operators is vans. Certainly most fleet-operated vans and so on are speed-limited as well.You could argue that if the speed limit was increasedyou could increase the limit level, but again thearguments that were made earlier about fuel economy,

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general safe driving techniques, eco-driving and so on,apply equally to van operations as they do to trucks.

Q14 Steve Baker: Bringing some of that togetherand particularly with Mr Cook’s remarks earlier aboutdriver frustration, it sounds like operators would wanttheir drivers to operate within certain constraints forthe sake of efficient operation. You have also talkedabout driver frustration. I know one of the things thatcertainly frustrate me and others is when lorries arecrawling past one another on the tolerance of theirlimiters. Do you think there is a case for a greaterdegree of freedom so that operators can get past oneanother but then drive at the speed that their particularhaulage operator wants them to?Nigel Cook: One of the things that my own operationfound was that, because we were running slower thana lot of the vehicles on the road, we don’t have thatfrustration as much. Going back to the interestingpoint on the cars, we do not have many cars in thefleet but we have looked at whether to limit them.Again, there is a significant benefit in running the carsa bit slower. Running 5 mph slower on a journey canbe more relaxing and there is also a significant benefitin fuel economy on most modern cars.

Q15 Steve Baker: You are saying that, given thechoice, people do what is generally regarded as theright thing.Chair: That is a slightly leading question.Nigel Cook: I see a lot of driving. I travel quite a lotand I see a lot of variations in driving.Chair: That’s a very diplomatic answer.Nigel Cook: Personally, I think the older you get, themore sensibly you drive. I find now that to run at thespeed limit of 70 mph is very relaxing and also verygood for fuel economy.

Q16 Paul Maynard: Tempted as I am to wonderaloud whether the speed limit for car drivers onmotorways is the biggest threat to your industry, I willperhaps leave that point hanging. Mr Semple, in yourevidence you suggested that the M6 toll road was nota good example of how to bring private sector financeinto road provision. Would you expand a bit more onthat point as to why it has not worked in the waymany had hoped it would and what lessons we shoulddraw for other potential future road schemes that theGovernment are looking at?Jack Semple: In brief it is not getting enough use. Itis not doing enough to relieve the congestion on theother roads. Why would you build a great swathe ofroad through the countryside to relieve congestionwhen it is not doing that as well as it should be? Thatwas the point, in essence. If we require additional roadcapacity, we should pay for it and we should, aboveall, ensure that it is used. One of the suggestions thatwe have had is that the Government introduce somesort of price-priming system to divert trucks off theM6 and on to the M6 toll. In essence, the key point isthat this road has been built and it is not being used.We are in favour of an increase in road infrastructurebut not if it is not going to be used.

Q17 Paul Maynard: Is your point that the businessmodel currently is wrong—i.e. the pricing structureis not attracting your members on to it—or was thefundamental financing of the project in the first placethat is driving the high costs of having to use it aproblem?Jack Semple: There seems to be a difficulty in thefinancing model. We have members who have lookedvery carefully at the price of the M6 toll onauthenticated contracts. They have looked at it withtheir customers. There is no criticism of the roadoperator in this, but the current price just does not paythem to use it. My basic point is that we should notbe building roads and then not making proper use ofthem.

Q18 Paul Maynard: Ms Dee, what is the lesson forthe Government for the A14?Karen Dee: The important thing from our perspectiveis about the pricing structure, the incentives and thecontractual arrangements that you have with theconcessionaire. The issue with the M6 toll, as Jack hassaid, is that it is not attractive to commercial vehicleoperators because of the price. There was no incentivein the way that the contract was drawn up for theoperator to make it attractive for heavy goodsvehicles. Again, we are not opposed to using privatefinance or indeed some form of tolling, but the pricingstructure needs to be realistic for our members anddesigned in a way that does not artificially deter heavygoods vehicles from using them.Jack Semple: I would add on the pricing structure thatit is very important that we focus on the need toreduce congestion for all sorts of reasons: economic,environmental benefits and so on. While the fundingis important, it should not replace the debate on theneed to reduce the congestion level. There is a feelingthat, if we need the road, we should pay for it and notcreate an unnecessary additional cost for the users ofthat road in the future. We have seen some unfortunateconsequences of PFI in other sectors. It is just acaveat. The important thing is the planning consentand Government willingness to create the conditionswhere a road can be built and the funding will thenfall in place fairly simply.

Q19 Chair: What does congestion cost you acrossthe industry?Jack Semple: Many billions of pounds, depending onwho you talk to and how you do the calculation. Togive you one example, every time a lorry stops at theDartford Tunnel Crossing to pay the toll, it costs anextra 50p just to accelerate. If you look at thecongestion and the increased costs in terms of time,reduced productivity and the increased fuelconsumption per mile, it is very substantial.

Q20 Chair: Do you have a figure, because there aredifferent figures put forward?Jack Semple: We could calculate one.Theo de Pencier: Both the conclusions and theevidence in the Eddington Report in 2006 estimatedthat by 2025 there would be an additional £25 billiona year cost to the UK economy from congestion.




Q21 Chair: Are you agreeing with the costings there,because different figures have been put forward?Theo de Pencier: Absolutely.

Q22 Graham Stringer: Is congestion reducing atthe moment?Theo de Pencier: Congestion is not getting worse asfast as it was before the economy started to contract.

Q23 Graham Stringer: So those Eddingtonprojections will be out now by some way.Theo de Pencier: The Eddington projections for themoment, yes, because of the reduction in traffic on theroads. I have to say that is mainly a motorist reductionrather than a goods vehicle reduction, but we stillthink the basic conclusions were pretty sound.Chair: We are just trying to get a picture becausedifferent figures are put forward.

Q24 Jim Dobbin: I know this session is about roadfreight, but what is your relationship as road haulagewith rail freight? Do you work together?Theo de Pencier: Yes, we do. Our members consignsomething in the region of 90% of the rail freight thatis currently carried. We work very closely with theRail Freight Group, for example, who are focused onencouraging more use of rail freight. Fundamentally,road and rail should work hand in hand. You have aroad leg at the beginning and at the end of virtuallyevery rail journey.The issues around rail freight and how much it is usedor not used are fundamentally economic ones. It isstill not as competitive as road freight for many typesof operation. Having said that, access to rail freight isthe other key issue and we feel as an organisation that,within the UK, there need to be significantly more railfreight interchanges to enable that transition to takeplace. We are well aware that, with the currentplanning system, our wishing for something andactually getting it in the places you need it is ratherdifficult.We have seen an increase in the use of rail freight andalso a significant switch from bulk loads—aggregates,steel or whatever it may be—to containerised traffic.That is where we see the future growth of rail freightcoming from. Most of my members will use rail asand when appropriate. There are certain capacitypinch points, but, again, plans going forward do giveconfidence that more will switch to rail for appropriatetypes of operation.

Q25 Jim Dobbin: That is interesting. Two years agoI asked an innocent question in the Chamber aboutthis, but I was hauled in before the road haulageorganisation in the north-west and asked why I hadasked that question. So that’s why I am asking you.Theo de Pencier: Although I appreciate that thisparticular meeting is focused more on road freight,our view is that there are different modes and differentstrengths. Rail is appropriate in certain circumstancesand water-borne freight is appropriate in certaincircumstances. We have sent examples to members ofthe Committee where companies that are our membersare using both of those modes alongside their roadfreight operations to the benefit of their efficiency, the

environment and generally speaking the operation thathas been chosen for that.

Q26 Jim Dobbin: On the issue of the interchanges,the Government have indicated that they may providemore. It is highlighting a lack of interchanges in thesouth-east. Why is that? I would have thought that inthe midlands and in the north there was a greaterdemand.Karen Dee: There is demand in the south-east; that iswhere a lot of the ports are. The problem has been, asyou would expect, that some of the planningrestrictions have in the past led to particular proposalssimply being turned down. There is a difficulty aboutcreating the additional capacity where it is needed. Wedo have a document that indicates it is not just in thesouth-east. There is a need for additional interchangecapacity in a number of places across the country. Itis not just the south-east but includes the south-east.Theo de Pencier: It is mainly England, I have to say.Where they have been built successfully in the past—and this is a bit of a generalisation—it tends to havebeen on the assumption that you needed a fairly longrail leg to make the economics work. Places likeScotland and some of the other current locations weredriven by that consideration, but there is a need forsignificantly more across the central core of GB atany rate.

Q27 Chair: Will the Government’s current plansmeet the need?Theo de Pencier: It all depends on whether you canget it through planning.

Q28 Chair: What is your assessment of that?Theo de Pencier: It will be easier going forward, butmore could be done, because we are still gettingthings thrown out and they are taking too long to cometo fruition.

Q29 Paul Maynard: I want to ask about cabotage inparticular and whether you could quantify the impacton your industry of the current levels of cabotage inthe UK.Karen Dee: It is not something that we have done onthe current levels. Cabotage is still relativelyextensive. There have been restrictions under the olddirective and it is being enforced. There are moves inEurope, and we have just seen a high level groupreport about two weeks ago, where they are seekingfurther liberalisation, which would cause us someconcern. I can probably get you some figures but it isnot something we have done for this particular year.

Q30 Paul Maynard: I want to play devil’s advocate.I am something of a heretic on the Committee in thatI actually believe in free trade and free movement ofgoods and people. Occasionally it is a problem.Clearly, in a European-wide context, can you explainto me what is wrong with other European operatorsand drivers having free access to the UK market tocompete with your members, provided—and I knowit is a big proviso—that VOSA is regulating theirsafety, what they do and that it is done in accordance




with the rules? Are you trying to oppose the freemarket here?Karen Dee: You are absolutely right and you wouldfind within the haulage sector that they are freemarketeers. It is not a matter of saying that they don’twant competition. If it were a completely levelplaying field, then UK operators would probably dovery well from it. The problem that we have is that,although in theory it is a single standard across Europefor haulage operations, actually what we have in theUK—and we are very proud of it—is that ourstandards are significantly higher. We have our Olicensing system, which we don’t want to seeundermined in any way. We have a higher level ofstandard, and I think the statistics on safety checksbear that out. So there is a safety concern and there isalso a cost concern, both for fuel and labour. It is amatter not of restricting access but of being able tocompete fairly and making sure they are meeting thesame access, the same costs and so on when they arehere.

Q31 Paul Maynard: Why aren’t you in Polandcompeting for business with Polish firms?Karen Dee: I am sure they probably are.Jack Semple: I want to add a couple of points to that.There isn’t any obstacle to foreign firms competing inthe UK. All they have to do is establish themselves inthe UK and meet the UK operating licencerequirements.A point that is relevant to the cabotage debate is this.The liberalisers say it is all for improvement of freightefficiency. That case is greatly overstated. Whathappens in reality is that you get operators who arenot necessarily running to the same safety standardsand who are not paying the same level of duty in fuel;in fact they are paying half the duty level. In addition,they are dipping in and out of the market; so they aredestabilising the UK established operator, who has areasonably established traffic flow. If that traffic flowand his backload is destabilised because a foreignoperator is dipping out for a month or two and goingaway again, then you are weakening the viability ofan effective domestic haulage market.Do we really want a situation where we have driversaway from base for extended periods of time? Thereis an element of social policy in this as well thatcannot be completely ignored. Do you really wantPolish drivers or any other kind of driver effectivelycamping here and not established here disrupting thedomestic market? Those are issues that we wouldhighlight.

Q32 Kwasi Kwarteng: Forgive me; I am going todrag you back. The debate ran away from me and Idid not manage to get my question in aboutcongestion. Clearly there is an issue with congestion.People—certainly in Government and other people inthe political world—have been talking about roadpricing. I want to know what your thoughts are aboutour attempts to deal with this problem.Theo de Pencier: In essence, as an organisation weare broadly in favour of moving away from relying onfuel duty for road investment because we think it isa rather blunt instrument and inextricably links the

commercial operator to the motorist, which we don’tthink makes a lot of sense. We are, and have been formany years, happy to look at alternatives, if I can putit that way.We think that there are a number of safeguards thatwould be needed on behalf of the industry, most ofwhich as a general rule from our perspective revolvearound it being a distance-based charge rather thansome of the alternatives that are being looked at. Ontop of that, we feel that the overall tax take shouldbe broadly neutral. We think the mechanism wouldwork better.Where we think it would have a significantly positiveimpact on congestion is often in providing incentivesfor other road users to operate at particular times andtherefore have a beneficial effect on congestion. Also,although I accept it is a separate point, if we canwiden the delivery window through things like quietnight-time delivery operations, many of which aregoing to be happening during the Olympics—andhopefully the lessons learned from that will enablethem to do it more regularly—then we should be able,effectively, to get better usage of the existinginfrastructure, forgetting for a moment additionalinfrastructure, and thereby run a more efficientoperation.

Q33 Iain Stewart: I would like to return to the issueof interaction between rail freight and road haulage.Mr Dobbin touched on many of the questions I wantedto ask. I was not 100% clear on what you think arethe main barriers to greater interoperation. Is iteconomic or practical in terms of capacity?Nigel Cook: From an operator’s point of view, we doa very small amount of interaction with rail. It isprobably down to the business that we cover. Wecover consumer goods, which is delivering tosupermarkets. The demand now is for very short leadtimes. Unfortunately, one of the constraints of the railnetwork is that they can’t react as quickly as we canby road. We have scenarios whereby customers orderin the afternoon requiring deliveries early tomorrowmorning. The rail networks run on timetables, as theyalways do, but they are very rigid, whereas roadfreight has more flexibility built in.There are also certain products that are not efficientto run on rail. You need to have a certain value ofproduct and it needs to be a weighty, bulky product.If you have a very lightweight, low-value product,then rail cannot compete as competitively as road. Wehave done quite a lot of work with a lot of customersin looking at lanes to try and move more on to railfrom an environmental point of view and obviously insome ways a cost point of view. We have found acouple of routes that are cost neutral but we haven’tfound any significant savings in moving to rail. Wehave moved some freight on to rail just from a break-even point of view, but we haven’t been able to findany significant savings.Jack alluded to this earlier. A lot of it is distance-related. Yes, it works very well in Scotland and theScottish freight operation has embraced rail. There area lot of movements in and out of Scotland on rail. Forthe rest of the country, the shorter distance means it is




very difficult to make it cost-effective. Road tends tobe more competitive.Theo de Pencier: I would add briefly to that. Thereare two issues, one of which Mr Cook has touchedon. At the end of the day it will always boil down toeconomics on the degree of usage, if I can put it thatway. Whilst rail freight has become significantly morecompetitive over the last 10 or 20 years, there are stillsome handicaps as well as the flexibility/adaptabilityargument, which will always go against rail. There arealso capacity issues, particularly running out of theHaven ports and southern ports up to midlandsdistribution centres. Traffic flows are being addressedby the Government.Secondly, the way rail generally works at the momentis that the passenger timetable has primacythroughout. You do still get a lot of rail freight activitydelayed by the need to ensure that the passengertimetable is adhered to by the train operatingcompanies.

Q34 Iain Stewart: Maybe I could ask my questionin a slightly different way. If the Government didinvest in increasing capacity or had greater priorityfor freight in the timetabling, is there potential for asignificant shift to occur or are the points that MrCook made always going to prevail and act as anupper barrier on growth?Theo de Pencier: A significant shift could occur. Ifyou broadly assume that rail carries something in theregion of 10% of freight movements at the moment interms of tonne-kilometres, there is a trend to shiftfrom bulk products to containerised, and that is wherethe growth is. Let’s assume capacity was not aconstraint either in terms of size of containers, andthat is a separate issue with larger containers comingin, which would, in many ways, be ideal for railfreight, but there are some capacity issues there on thenetwork. Let’s assume all of that is dealt with, andmost of it is in the process of being dealt with or deal-able with, then there could be a significant increase ofup to an additional 50%, certainly in the short tomedium term, in current rail freight traffic. It is stillin comparison with broadly the 90% of movementsthat go on the road.Jack Semple: I would add one or two points in termsof rail freight. We should not lose sight of the fact thatinterchanges do take up a lot of land. They willgenerate a great deal of local truck traffic and theenvironmental benefits may not be as great as areassumed, because in some cases you have to add milesat the beginning and end of the journey. Also, there isthe question of the extent to which you subsidise railfreight. If you are trying to get the economy goingagain, in terms of carbon and other benefits, youwould be likely to find that that public investment wasbetter being put, for example, into generating moremanufacturing and process or other industry in theUK, generating more wealth and reducing carbon aswell if you are shipping less goods halfway roundthe world.

Q35 Julie Hilling: I want to ask some questions ontraffic management. Are Freight Quality Partnershipsstill in operation? Do you think they are working?

Does it mean that hauliers have a voice in the localmanagement of roads?Karen Dee: Yes, they are still in operation in someparts of the country. The changes to the structures oflocal government are impacting on some; so in someareas they no longer continue but in other areas theyare still thriving. It is very difficult to say that theywork as a general principle because they tend to bevery different according to local needs. That is not abad thing. Where they do work well, they encouragebetter dialogue between local authorities, businessesand freight operators locally. They can be a veryuseful vehicle.

Q36 Julie Hilling: One of my local hauliers said thathe was concerned about traffic management schemesthat were introduced creating pinch points atroundabouts and other things like that, which meantfreight could then not go around those routes and itcreated more congestion sometimes because of thosedifficulties. Is that something you think you are notconsulted about or is it something that could be donebetter?Karen Dee: Freight Quality Partnerships are only onepart of that because they create a dialogue. It reallydepends on what they are being used for. They are notalways directly governed by the local authority, forexample. Traffic management, restrictions on HGVmovements and those types of issues can be a problemacross the country because people don’t like lorriesgoing into town centres. They will tend to not thinkthrough the consequences or have a knee-jerk reactionto what they are trying to achieve. We would alwayssay that local authorities need to think through whatit is they are trying to achieve with these restrictionsbecause, often, they do not achieve what they thinkthey are going to.Nigel Cook: I sit on the Tyne and Wear FreightPartnership, which I have found very useful and it hasbeen very beneficial. The disappointing thing is that Iam one of two operators actually involved with it. Asan industry the RHA and FTA have been represented,but as an industry of operators we have not embracedthis opportunity to get involved with the FreightPartnerships. Although the north-east one has beenvery successful and award-winning, it could probablyget more out of it if it could get more people engagedto be part of it.

Q37 Julie Hilling: My local haulier also said thatlorries—or at least small lorries—should be allowedto travel in bus lanes. Do you have a view on that?Nigel Cook: Unfortunately, as an industry nobodywants a truck in their back yard but they would stillcomplain if the shelves weren’t full when they wentto the supermarket. We are in a Catch 22 situation.There are certain places where it would be of benefit.In Newcastle, for example, which is my local city, wehave no-car lanes. Trucks and buses can use the lanes.As opposed to having a bus lane, we have a no-carlane. The issue is that it is full of white vans at themoment; so they may have to differentiate that.Everybody who tried to save company car tax andbought a pick-up runs up and down the no-car lanesbecause they have a pick-up. Tyne and Wear has




looked at that and it has been reasonably successful.It has to be very much specific to an individualrequirement of the city.

Q38 Chair: Mr Semple, do you have a view? Pleasegive us a quick answer as we want to get one or twoother points in before we finish.Jack Semple: Very briefly, the RHA coined the term“freight buses” for exactly this purpose. It does workin certain areas. South Gloucestershire had a statementof reason for letting trucks into the bus lanes on oneof its bypasses. They said it works very well. Itreduces the carbon output, greatly increases theefficiency of trucks and slightly improves theefficiency of cars. It has virtually no impact on thebuses. So it works very well.

Q39 Julian Sturdy: We are looking at over twothirds of freight transported on our roads. We havealready talked about the difficulties of shifting to rail.Although it is not impossible, we know there are somemajor infrastructural difficulties there. TheGovernment are committed to reducing carbonemissions. Do you see a conflict between the twocoming down the line? If so, do biofuels play a rolein that?Theo de Pencier: Basically, the much better bang forthe buck—and I am not ruling out modal shift and soon as useless; it has a role to play—is roundly throughefficiency improvements in being able to eliminatethings like idling, empty running and a whole bunchof other issues that the road freight industry iscontinually working towards anyway. Fundamentally,if you can operate more efficiently you are reducingyour costs, and we all know the issue around fuelbeing now about 40% of the operating cost of a largegoods vehicle. There are plenty of other things thatcan be done that tend to produce a faster improvementor reduction in carbon or other emissions to help theGovernment meet targets.One of the biggest improvements that could happenin urban environments would revolve around beingable to extend the delivery window. This is the pointI mentioned earlier in relation to the Olympics andtrials that our members have been involved in withthe Department for Transport, looking at quiet waysof delivering at night, which both takes trucks off theroad and improves their operating efficiency. They arerunning at slightly higher speeds between drops sothat reduces emissions. Idle time, either because ofcongestion or just because of poor operatingstandards, is among other significant improvementsthat can be made. There is a role to play for ourindustry in helping the Government meet theircommitments, but it is equally about operating roadfreight more efficiently rather than just saying puteverything on rail or go electric or hybrid, or whateverthe heck it may be.

Q40 Julian Sturdy: You are saying there are goingto be technical advancements, which we are seeing inmotor cars, which are going to come into the roadfreight side of things as well.Theo de Pencier: Road freight has been significantlyahead of the car for about the last 20 years. The

improvements are in terms of reduction in carbon andother emissions and so on. Truck engines tend to besignificantly more sophisticated than car enginesbecause of the telematics involved and becauseoperators will specify and run them in order to getthat efficiency.Jack Semple: If I can put it into context, theGovernment are concerned about carbon. If you takeone lorry load, are we going to move it on diesel fuel,gas fuel or by train? If that lorry-load of goods iscoming from China, it is doing the equivalent of 4,000miles in a lorry. In terms of the investment return, ourmembers would say that, if the Government reallywant to improve our carbon output, they should begenerating more business and manufacturing processin the UK.

Q41 Julian Sturdy: Mr Semple, the Road HaulageAssociation has been quite critical of theGovernment’s biofuels policy. Is that where yourcriticism lies or do you have other concerns as well?Jack Semple: That was a general point. In terms ofbiofuels, we are looking for a much clearer steer fromthe Government as to what it wants from alternativefuels. It has launched the Technology Strategy Boardcompetition, which we think is not the best way ofpromoting fuels. There is no clear policy guidancebehind that as to where it wants industry to go. I thinkit could have chosen a better vehicle for promotingalternative fuels. Going forward, the whole of Europebut certainly the UK struggles to get to grips with thisissue. There has been cost involved in the past. Thereis uncertainty and a lack of confidence in the industryat the moment. We are looking for clearer guidancefrom Government. For example, if they want topromote natural gas, then there could be a clearerstatement of reason for that and they could probablydo it in better ways than the current route.

Q42 Steve Baker: I will be as brief as I can. A lothas been said about the economics. How high wouldfuel duty have to go before there was serious modalshift away from road freight?Jack Semple: One risk is how much business youwould drive out of the UK to other parts at the far endof Europe or China. If I could get back to the analogyof tinkering with the carbon output of one lorry-loadof freight while you are bringing it 4,000 lorrymiles—

Q43 Steve Baker: I am sorry, but that is not quitewhat I am getting at. On the economics, how muchhigher would fuel duty have to go before roadtransport became uneconomic and freight seriouslystarted to move to rail?Chair: Can you give a quick answer?Theo de Pencier: The question is wrong. That is myquick answer. Basically you have road at either endof rail, with capacity constraints on rail—Chair: The Minister will be here in a moment.Theo de Pencier:—and, also, most motorists wouldhave left the road long before you have priced trucksoff, which would improve operating efficiencies farmore than anything else.




Steve Baker: I am very happy with the answer thatfuel duty interventions are absurd.Jack Semple: The more expensive fuel duty becomes,the more you will see foreign trucks in the UK thathave fuelled up abroad at a far lower cost.

Examination of Witness

Witness: Mike Penning MP, Parliamentary Under-Secretary, Department for Transport, gave evidence.

Q44 Chair: Good morning, Minister. Welcome to theTransport Select Committee. Could you tell us whatrole the Department has in relation to settingGovernment policy on fuel duty?Mike Penning: None. It is a Treasury matter.However, I am sure the Committee is aware that weare doing whatever we can to make sure that ourhauliers have a fair and level playing field withoverseas operators when it comes to fuel. That is whywe are going to introduce the lorry road user charging,which we have a commitment to bring in by the endof this Parliament. The reason for that is because, ofcourse, fuel is substantially cheaper on the continent.Hauliers come over with underslung belly tanks andit is very difficult for our hauliers to compete withthat. Admittedly, it is only about 5% of the industrythat is physically affected by that, but we have felt forsome time that we need to help the hauliers on that.We will bring in a charge that our hauliers can claimback, which will help level off the fuel chargedifferences.Of course we have the cabotage rules. One of thethings I am asking VOSA to do at the moment is tobe much more involved and put more commitmentin time and money into enforcement of that with theoverseas hauliers. They are doing more of that.

Q45 Chair: The hauliers have told us that fuel dutyis crippling. What else could your Department do totry and assist?Mike Penning: Fuel duty is crippling if they are notall paying exactly the same on charges. For them it isvery difficult to compete. They can compete againsteach other if they are all paying the same charge forfuel because you will get a level market there.Overseas hauliers are entitled to come over under therules, but a huge percentage of our goods from ourmanufacturing base going out into Europe, which issomething like 46%, is taken out by foreign-platedhauliers.We have to be slightly careful because some of ourown hauliers are registered abroad as well now. It isa balance, but we are doing everything we can tomake sure there is a level playing field. However, andI am not passing the buck, it is a Treasury matter. TheTreasury quite rightly see the income from fuel dutyas an income that is spent in general terms; it is nothypothecated, but it does allow me, for instance, inthe next three years to have £4.6 billion worth of roadprogrammes, which have to be funded fromsomewhere. That is what the Treasury would say toyou.

Chair: On that note we will end. Thank you verymuch for coming and answering our questions.

Q46 Paul Maynard: I did not get to ask the previousset of witnesses this question so I may be puttingwords in their mouth, but let’s go with it anyway. Oneof the unimplemented pieces of the 2006 Road SafetyAct related to motorway rest areas and other rest areason the strategic road network. Despite passing thelegislation, the last Government failed to implementtheir recommendations or the law itself. Can you tellus a bit about what you are doing because, as I amsure you would agree, lorry driver tiredness is perhapsone of the key road dangers in this country?Mike Penning: I don’t know if the Committee knowsthat I hold an HGV licence and have driven HGVs inmy previous occupation—not the present one.Chair: We thought you might have some spare time.Mike Penning: Tiredness is a massive issue, whetherit is for HGV drivers or any driver, to be fair. Thereare physical restrictions on the amount of time that acommercial driver can drive, and I think that is rightand proper. There are some anomalies out there thatwe need to address. For instance, if you are workingduring the week in a completely different occupation,at the moment the directive would mean you wouldhave problems driving a horse box to your daughter’sgymkhana at the weekend if she was likely to win aprize. I think that is ludicrous and we need toaddress that.Going back to the point, one of the first things we didwas to have an immediate review of rest areas to findout where the lorries could and could not park up. Iam quite determined that not only do lorries need topark up and have their rest time but they need to parkup in suitable places, which in my own constituencyis not the first road off the motorway or the nearestlay-by. Sadly, lots of things are chucked into thebushes at the bottom of people’s gardens, which wedon’t really want to talk about. We need to make surethat lorry parks are doing their job, as well as theservice stations on the motorways.One of the things we have looked at very carefully isto make sure that we have enough service stationswhere they are needed and there is a physical lengthof motorway between service stations. This is stillwithin the legislation, but what we have looked at iswhether or not we need more service stations and tomake sure that they have the capabilities of lookingafter lorries as well as the rest of motorists. That workis going on. To be fair, the operators of the servicestations have started to cater much better for the dualuse that they need to have, which is getting lorries offthe road at the right time. At the same time we needto make sure that we enforce the driver regulationsthrough their tachos and that they are not being



3 July 2012 Mike Penning MP

tampered with, because that is really important aswell.

Q47 Julie Hilling: I want to follow up on the safetypoint. Sleep apnoea is a big issue. Is enough beingdone around fitness to drive for drivers across thepiece, whether that concerns sight, sleep apnoea andso on?Mike Penning: You and I have talked privately aboutsleep apnoea. I completely agree that it is a massiveissue that we need to address, along with issues asto whether someone should be able to hold either acommercial or ordinary driving licence if they sufferdiabetes, epileptic fits and things like that. One of thethings I hope the Committee will be aware of is thatI am very conscious that we should not take licencesaway from people just because they have an ailment.We should take their licence away from them becausethe clinicians say they are unsafe to drive. Those aretwo completely different things.I have worked very closely with Diabetes UK andBaroness Young to make sure that people withdiabetes, for instance, understand what we are tryingto do, which is not to stop them from driving butmaking sure they are safe to do so. There was a bigfear that lots of people were going to lose their licencewith a change in the rules that the previousAdministration were looking at. I have said that safetyis the paramount thing, but freedom for someone tohave a licence is also very important. We have cometo an agreement with them on that. I think we areokay on that. We are working our way throughepilepsy. Sleep apnoea is on the list. It is much morecomplicated and much less understood than the twoother ailments which I have alluded to, but it issomething we are working on.

Q48 Julie Hilling: Is it something like making thedrivers have regular medicals, for instance? Is theresomething that should be done?Mike Penning: HGV and PSV drivers already haveto have a medical. One of the reasons I don’tphysically hold my HGV licence at the moment isbecause I haven’t taken my medical. You have to haveregular medicals.For the UK driving test, if you wish to have a carlicence, the practicalities of doing that would beonerous, to say the least, but it is the responsibility ofthe driver and also the people who medically advisethem as to whether they should be able to drive. Ifyou go and see an ophthalmologist and you haveglaucoma, he will advise you that you should give upyour licence. I warn the Committee that the medicalpractitioners are loth to be the source of informationto us. They feel that that would be a breach of theirconfidence with their patients, which I think we canprobably understand. On the other hand, we need tomake sure that we get the message out on a regularbasis that it is your responsibility as the driver,whether you are a commercial or a pleasure driver, tomake sure that you are still capable of driving thatvehicle.

Q49 Julie Hilling: I want to ask one more questionabout vehicle safety. One of the things that a local

haulier raised with me was his concern aroundparticularly foreign operators. If a British operator’svehicle is found to be unsafe it is immediately takenoff the road, but it is not so rigorously enforced for aforeign operator.Mike Penning: I would argue that it is and would askyou for any evidence that it is not. There is a depositsystem on fines operated for foreign drivers that is notoperated for UK-registered drivers. We hold finances;we hold their money so that, for instance, if they arein breach and they do not pay their fines, we havetheir money. I was with VOSA on the side of theM62—maybe not right on the motorway but withthem—when they were demonstrating the axle weighttechnology. A foreign vehicle went under the bridge.It came through on the radio that he was overweighton two of the axles. He was pulled in and prosecuted.They did it there and then. Cabotage is the other onethat they get a lot.There is something I would like to do, and I am openand honest about this. Free movement of vehiclesthrough our ports is something that we agreed to underthe EU regulations. We are in a situation where wemight know that a foreign vehicle has a track recordof being faulty and in a dangerous condition, but Ican’t pull it over until it is on a British highway. Thatis something we are working on now to see whetheror not I can have the powers, if necessary throughVOSA, to hold that vehicle. I would much rather holda vehicle if it is unsafe and have someone do that atDover rather than let it go on a British highway andhave an accident happen before I can get to it.

Q50 Julie Hilling: Are the cuts in VOSA, though,restricting their ability to do that?Mike Penning: No, they are not. “The cuts in VOSA”is an interesting way of describing it. What I am tryingto make VOSA concentrate on is enforcement and nottesting. The private sector is doing more of the testingnow for us with MOTs on lorries. There is a demandfor that and that is happening. I am moving a lot moreinto the enforcement side, which is where we needthem.

Q51 Jim Dobbin: Minister, I asked the road haulagepanel this question and I am just wondering what theDepartment for Transport’s view is. It is about therelationship between rail freight and road haulagefreight. Do you think it is working?Mike Penning: There has been a dramatic change inthe last five years. There are even bigger changescoming down the line, using a terrible pun. The reasonfor that is because the big suppliers—the Tescos andAsdas of this world—do not want huge distances ofroad bridging. They want the bridge in between thedistribution centres and their stores to be shorter andshorter. There are lots of different reasons for that, notleast because their clients are saying they don’t wantthe emissions and want to be environmentallyfriendly. The slots in timings of deliveries for themmean that, if they have shorter distances, they can bemore exact in what they are doing.If you look at the changes that are taking place withinthe logistics industry, you will see people like EddieStobarts having a rail hub inside their distribution




centres in the north-west. You will see Asda at portside with a distribution centre and rail. If you look atHutchison Ports, where most of our container boxescome in, that is by far the largest port we haveoperating at the moment. I opened the start of workson their third rail terminal in there. If you look atGateway Port, which is being built just down the riverfrom us here at the moment, it is an integrated hub/rail/road/seaport. That integration is happening andthe hauliers realise that there are lots of changes afootand that they have to address that and how theindustry is moving on. It is moving quite fast to amuch more integrated modal system.

Q52 Jim Dobbin: That brings me to interchanges,which you mentioned. What is the Government’s planto develop and increase the number of interchangesacross the country?Mike Penning: Interestingly enough, at the momentthere is an application in not far from ourconstituencies in St Albans, at Radlett, for a rail hubinterchange. Quite a lot have recently opened.Certainly in any public inquiry to do with planningapplication gateways, it is absolutely intrinsic withintheir planning consent that the rail hub is part of it.I have to admit, though, that there are issues to dowith modal shift on to rail, particularly on the WestCoast Main Line, because of the capacity issues. TheEast Coast is nowhere near the capacity that the WestCoast is. If we push much more on the West Coast,we will really struggle. We want more to go on rail,which is why—I know the Committee has looked atit and I don’t do rail—HS2 is so vital to Birminghamand beyond because it will free up freight capacity,which is the bit I am interested in, on the West CoastMain Line, where we are struggling with capacitynow.

Q53 Julian Sturdy: Minister, leading on from thequestions from Mr Dobbin, where does freight fit intothe Government’s view on the strategic road network?Mike Penning: It fits in, in that when I became theMinister just over two years ago the portfolio waschanged. I had the full logistics portfolio literally fromthe driving licence that the haulier is allowed to have,to the test, right the way through to the ships and theport at the other end of it. In the middle of that is themodal part between aviation, rail and, of course, theroad network. No matter how much we move loads onto rail—and I would like a lot more by water, which isa separate discussion to be had—it will predominantlybe on road and so the strategic road network is vitalto us. That is why a lot of people were surprised atthe sheer amount of money I got for new programmes,even in these difficult financial times. An upgradeinfrastructure from the Treasury was ever so usefulbut ever so needed as well.

Q54 Julian Sturdy: Following on from that, theGovernment stated that they would work towards theintroduction of a new system of HGV road usercharging. Is that still the case and something youbelieve we should be pushing in the currenteconomic climate?

Mike Penning: Yes. One of the things we promisedwas that we would bring in a better level playing fieldfor the hauliers. I alluded to this earlier on in answerto the Chair. The hauliers, quite rightly, go on and onabout the fact that they cannot compete with theforeign hauliers. We are one of the only countries inEurope that does not have a vignette system. If webring in a vignette system at, say, £10, our haulierswill be able to reclaim that against their VED. Therewill be a fraction of them—about 6% of myhauliers—that will be fractionally worse off, but nomore than £50 or £60. What we are going to do iswork with them to probably re-register their vehiclesin a slightly different VED scale so that literallyhardly any of them will be worse off. That has beenwelcomed by the haulage industry. It is a promise wemade and that we will fulfil in this Parliament. ThePrime Minister is absolutely committed. I took aphone call from the Prime Minister only the other dayon this particular subject. We are committed to doingit.

Q55 Chair: When can we expect to see something?Mike Penning: I expect legislation in next year’sprogramme. I need primary legislation. If you look atthe programme, we are in a five-year Parliament. Thisyear I do not have it. Next year I have to have itbecause it will have to be in by the following year.

Q56 Chair: Will there be draft legislation that wecan scrutinise?Mike Penning: Yes, as soon as we have the draftlegislation. These are really delicate negotiationsbetween my Department and the Treasury, as you canimagine. There are cost implications to us of doing itand to the DVLA because people have to do it. It isso important to the industry that not only do we talkabout being on their side but we actually are on theirside when it comes to this.

Q57 Kwasi Kwarteng: Obviously there was the2011 review on productivity in the logistics industry.Can you tell the Committee what progress has beenmade following that report?Mike Penning: There has been, I hope, a sea changein relationships with the logistics industry. When I hadmy HGV it was never discussed in the logisticsindustry. It was a group of hauliers. The skills of thelogistics were never really brought to the forefront.They have been now and quite rightly so.What has also happened is that they have theconfidence to be able to come forward early and sayto Government, “We are worried about this.” Forinstance, the haulage industry came to me 18 monthsago and said they were very worried that Europe wasgoing to legislate against the height of the four-metretrailers. That gave me a good opportunity to go backto Europe and say, “Why are you doing this?” Austriawere the people pushing it because of the size of theirtunnels. We have not only been able to say, “By theway, we won’t do this”, but to negotiate to say, “Weare very happy to do that.”The other one is probably semi-trailers. It had beendiscussed for years as to whether or not it wouldhappen. I have no interest at all in increasing weight.




What I am introducing is efficiency, emissionsmeasures and so on. I think we are better, but we arealso better in understanding the logjams on thenetwork—where the pinch points are. We have to bereally honest about what we can and can’t do. Weknow that the A14 is a massive pinch point for thehaulage industry coming out of Felixstowe. We haveto address that, but I don’t have £3 billion in mybudget to be able to do one road programme.

Q58 Mr Leech: Can you update us on progress withthe larger lorries trial?Mike Penning: Yes; this is the longer semi-trailers.You are aware that we have a pilot going similar towhat they have in Germany. We have 900 of theshorter trailers and 900 of the other, all of themoversubscribed. Interestingly enough, I did hear somerumours at the Commercial Motor Show recently thatsome people might be holding on to their allocationbut not actually using it. I have written to the industrynow and said, “If this is the case, I want you to handit back because I have people who want to use it.” Itis very early days, but at the moment there have beenno instances of some of the concerns to do with roadsafety as yet. We will keep a very close eye on that.The turning circles on them are much better than on atraditional trailer because of the turning bogeys. Weknow as a fact that we are getting more productsmoved with fewer vehicles simply because of that.Remember that each one of these trailers has had togo through our VOSA and VCA testing process; so itis an ongoing process. To be honest with you, Ithought it would be quicker and that we would havemore vehicles on the road than we have, but we needto do the testing and make sure that they are safe, andthat is what we are doing.

Q59 Mr Leech: How will we measure success?Mike Penning: In my opinion, the measure of successwill be exactly the reason why we did it: moreproducts moved with fewer vehicles, fewer emissionsand safer. If we can hit those three targets, we willhave done what we wanted to do.

Q60 Mr Leech: One of the potential criticisms withlonger lorries is that it makes it less likely to transferfrom road to rail. Will that be taken intoconsideration?Mike Penning: I have heard this criticism and I donot necessarily think that the people arguing thatunderstand what we are moving around in longersemi-trailers. This is not about containers, which arepredominantly moved by rail, or loose products. Thisis predominantly lightweight cages that are goingfrom depots or hubs into supermarkets. It has no effectat all on the length of a trailer that has containers onit and predominantly goes by rail.

Q61 Mr Leech: Is there any way of measuringwhether congestion might be reduced or increased bylonger lorries?Mike Penning: Certainly once we get the fullallocation out there we will have a much better idea.But remember it is exactly the same tractor unitpulling the longer semi-trailers as before. We accept

that there will be an effect on fuel consumption, butit will be less than what it would be if we had two orthree lorries out there.

Q62 Mr Leech: The trial is for 10 years.Mike Penning: Yes.

Q63 Mr Leech: Is there going to be a constantappraisal of the scheme throughout the 10 years, orwill we not know whether it has been a success untilthe end of those 10 years?Mike Penning: There are two things going on there.I think a constant appraisal would be rather expensive,but we will appraise it as it goes through. I want allthe trailers out there first and then we can startappraising them. Until I have them out there we can’tdo a proper appraisal. However, I was in the EuropeanParliament in Brussels only the other day talking tothe Chair of the European Parliament TransportCommittee. Interestingly enough, there is a documentcoming out from the Commission where, for the firsttime, they said they are not worried about the lengthof the trailers that I have gone to and there are someeven longer than we have. That did surprise mebecause I was informed legally that the Commissionmight have a problem with what I was doing, but thereis a document out there clearly saying that they arenot. That indicates to me that perhaps Germany or oneof the other countries is looking to go further. I amnot interested in going further at the moment—certainly not until the end of the trials.

Q64 Chair: Thefts from trucks costs £52 million.What are the Government going to do about it nowthat TruckPol has gone?Mike Penning: The best place to park a truck at nightis inside a proper, legitimate truck stop; that is thesafest place by far. Historically, a lot of truckers will,for want of a better word, pocket the overnight moneyand park in the lay-bys. That is the most dangerousplace for them. We need to protect them and doeverything we can. Only recently when I was onpatrol with my own police in my own area we stoppedat some of the lay-bys and talked to some of thetruckers there, but the police don’t have the capacityto do that all over the country.One of the things that I have been really pleased tohear—and it is to do with tiredness as well—is thatsome hauliers are now insisting that they bookovernight accommodation for their hauliers in truckstops. I must not use the commercial name, but someof them are booking them into some of the smallhotels inside some of the service stations. They realisethat the safest place for their truck is inside with aworking CCTV. That is one of the things we need toencourage, which is one of the reasons why we didthe review of where trucks are and are not stopping.We are very conscious about where the hotspots areand we are trying to do everything we can with thatas well.

Q65 Graham Stringer: Changing to theenvironment, what contribution do you expect fromthe freight sector towards the targeted reducedemissions of carbon dioxide by 80% by 2050?




Mike Penning: While we certainly want growth andeverybody is also looking at growth, the one thing thatthe hauliers look at on a regular basis is the cost oftheir fuel. The more cost-effective they are with theirtrucks, as well as the people driving their trucks, thatwill be where they come from.The other thing that is happening to my surprise—andI will be honest about that to the Committee—is thathybrids are coming through the chain now. If you hadsaid to me two years ago that we would have an 18-tonne hybrid operating in the UK as a commercialventure, frankly I would probably have laughed. Thecost differentials are still very expensive for hybridsbut they are coming down. If any of you have theOlympic torch coming through your area, the Coca-Cola lorry is a hybrid. It is an Eddie Stobart lorry.

Q66 Graham Stringer: Do you think they are goingto reduce the CO2 emissions by 80%?Mike Penning: There are measures that are comingin. The industry understands better than anybody thecost of fuel and their emissions. That is one of thethings I was commenting on earlier. The Tescos,Asdas, Sainsbury’s and Morrisons of this world aretelling their people, “We want you to road bridges theleast amount possible.”

Q67 Graham Stringer: They were here as witnessesjust before you came in. They put forward theargument that it would be better not to import so manygoods from China, where there is a huge carbondioxide footprint, rather than to try and stop goodstravelling about our roads. What is your response tothat point?Mike Penning: The hauliers said that.

Q68 Graham Stringer: Yes; they are sat behindyou now.Mike Penning: I think their profit margins would bedramatically affected if we didn’t have that. To behonest, I would love to see my ports export just asmuch as they import, and I would love to make surethat we have the least amount of haulage traffic on theroad affecting the environment. However, growth isan important thing and we have a desire to consume.A lot of these products do come in from China andother far east countries. We don’t produce most ofthose products.

Q69 Graham Stringer: That is really their point—that we should.Mike Penning: You might need a BIS Minister sittingin front of you rather than a Transport Minister. Myjob is to make sure that what is hauled is hauled asefficiently and as safely as possible with the leastamount of emissions. To be fair, the emissions criteriaon a lot of the new trucks coming have completelychanged. I know they are sitting behind me and theywill nod at this. Their biggest interest is fuel. Theywant to make sure that their vehicles, and their driversin particular, are as efficient as possible.

Q70 Chair: What about changes in Europeancabotage arrangements? Is there anything theGovernment can do to stop those?

Mike Penning: At the moment they are allowed threewithin the cabotage. If I am honest about this, wouldI like to limit that? Yes, of course I would, but thereare also a lot of our hauliers that go abroad and dosimilar. However, what they would tend to do, if theyare going abroad, is not go across with full tanks andfill up once they are over there and utilise thatcapacity. We have to fight our corner when it comesto the cabotage and make sure that what is being donenow is not being abused, which we know at times itis. We need to make sure that we enforce cabotagestrongly now. From my meeting last week in EuropeI don’t think there is any appetite for Europe to moveinto restricted cabotage. They feel it is free movementof trade, but what I want is fair as well as freemovement of trade.

Q71 Julie Hilling: We need to recognise that,whatever we do with freight, whether it is water, railor whatever, the last few miles are going to be byroad. Hauliers have said to me that they have realissues around, in particular, traffic managementschemes. There are pinch points at roundabouts andredesigns of junctions that mean lorries can no longeruse those routes. How can freight hauliers be moreinvolved within the local community in terms of localtraffic management solutions?Mike Penning: The area around a pinch point isn’tjust a local area thing. I have released another trancheof money to address pinch points in infrastructure thatneed to be changed. It is something I have beenpushing with local authorities through my colleagueNorman Baker, who does local authority roadinfrastructure. It is all well and good saying, “Youwant to put a weight limit down that road”; that’s fine,as long as you can get the lorries into yoursupermarkets at the time of the day when they needto be there. There is a lot of work being done aboutquieter night-time deliveries and so on. At the end ofthe day there are only a certain amount of lorries thatcan be parked outside your local supermarket and itprobably needs 10 or 20 of those a day. We need tomake sure that the infrastructure is there.This is a local issue. It is something that we adviseand help the local authorities with. At the same timethe hauliers have to understand that they can blight acommunity if they take a short cut or a different sortof road that is not really suitable for them.

Q72 Julie Hilling: One of the concerns expressed tome was that it concerned roads that they had alwaysused, but then they had the narrowings and all theseother things that happen, which meant they becamemore dangerous and more congested. Should the localauthorities be made to consult hauliers in some waybefore they make those changes?Mike Penning: To be fair, I think they do. If you usethe terminology, “We’ve always used that road so wealways should be able to use that road”, that is notright. If the hauliers are saying that to you, then Ithink we should all see common sense. If they areputting chicanes and that sort of infrastructure in, thenthe authority is trying to discourage you from goingdown there, but they must make sure that you have away in and a way out that is suitable. Frankly, the




engineers in local authorities are highly qualifiedpeople and they should know how to deal with that.If there are instances, then by all means tell me and Iwill ask my colleague Norman Baker to look at that.

Chair: Thank you very much, Minister, for comingand answering our questions.

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Written evidence

Written evidence from the Road Haulage Association

Fuels Policy

We are concerned that there is a lack of clarity with regard to government fuels policy.

Bio-Fuels

Biodiesel is integrated with fossil diesel at up to 7% in the general diesel stock and the introduction in theUK has led to additional costs at each stage of the supply chain, from suppliers’ fuel storage tanks to depottanks, retail pumps and in some cases engine injection systems.

It is perceived that these consequences were neither well understood nor costed. Looking ahead, with likelyincreases in biodiesel content, there is environmental and technical uncertainty as to how this will develop.

Other alternative fuels/technologies—such as hybrid and natural gas

The issue has at-best, a chequered past, an unclear present and a future that may miss opportunities. Ourconcerns are to promote best options for the UK operator and ensure equal opportunity for hauliers regardlessof size wherever possible.

The past is relevant because it informs current attitudes, to some degree. In the mid-late 1990s, natural gaswas promoted strongly, particularly by junior transport minister David Jamieson, and became an issue thatmany firms explored, for both 100% gas and dual fuel, gas/diesel. There was a lack of long-term clarity andfollow-through from government, which along with early technical/operational problems with the technologyundermined confidence. Confidence can best be restored swiftly by DfT taking a clear lead.

The message from truck manufacturers to operators over the past decade can be characterised as “thealternative fuel is diesel”. We are therefore building alternative fuels from a very low base.

The need for an enquiry

The government appears once more to be dabbling in alternative fuels. The Technology Strategy Board’sHGV fuels competition is an inappropriate route to promoting alternative fuels and the process has revealed alack of transparent government policy across departments (although the TSB has done its best with a difficultchallenge). There is also a potential conflict between CO2 and pollutants such as NOx and PM.

Processes such as the TSB competition are in place to move the alternative fuels issue forward but thecommittee may wish to review those and see whether the Department is showing sufficient leadership andurgency.

DfT Compliance Policy for HGVs

The RHA is currently going through a formal consultation process with members through its regionalcouncils on the DfT’s compliance policy, particularly in respect of the Vehicle and Operator Services Agency(VOSA). Subject to completion of that process, which it is planned will lead to a public policy statement inlate July/early August, the broad content is clear and agreed.

There is a strong sense that the DfT’s policy falls short on effectiveness, clarity and direction. Studiesconducted by VOSA (through a market research company) point to a satisfaction level that is far higher thanis shown to us by members.

Much discussion has taken place with trade associations, and there has been much publicity centred onVOSA’s Operator Compliance Risk Score (OCRS), an imperfect internal VOSA tool for scoring the risk ofindividual operators being non-compliant. It has also assisted in improving elements of operator’s processes,especially in respect of annual testing. OCRS has some value.

However, the same transparency is absent in a number of other VOSA activities, including budgetallocations, depot visits and actions and outcomes in respect of the serial and seriously non-compliant.

On the separate but important subject of who carries out annual tests, members feel strongly that, while theydid not press for the testing transformation programme that has led to the creation of privately-ownedAuthorised Testing Facilities (ATFs) and the intended closure of most or all VOSA test stations, now that theprocess is well advanced ministers should be planning for testing to be fully opened to the private sector withina robust regulatory regime that sets high standards. The VOSA monopoly (or the option of a similar private-sector monopoly) adds cost and inflexibility that holds back realising the benefit of the ATF programme.

VOSA’s chief executive was reported recently (in Commercial Motor) as saying VOSA priority was to makeATFs more efficient rather than increase the number of ATFs. The best way to do that would be to endVOSA’s monopoly.

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Roads

The condition of UK roads is of central importance to the road haulage sector.

In an email survey of members during summer 2011, road congestion was identified as the joint-equalgreatest barrier to growth, in terms of the logistics sector along with access to finance. These two issues werewell ahead of other factors.

Road safety is increasingly also being mentioned by members, in respect of pot-holes and white lines.

Our road concerns in terms of the DfT centre on:

— budgets for maintenance of existing roads, both Highways Agency and local authority;

— in respect of local authority roads, the need for stronger communications between DfT and DCLG;

— measures to reduce congestion, especially through pressure point road improvements and new roadconstruction; and

— a revision of the current allocation of limited road space to allow essential delivery vehicles accessto bus and high occupancy lanes.

In terms of financing future road building, the views of members expressed thus far are that if we do notneed a road we should not build it and if we do need a road it should be used. Members are much concernedby funding models that treat this basic infrastructure as a profit opportunity. The M6 Toll is held up as anexemplar of how not to proceed, although we make no criticism of the M6 Toll operator, who works withinthe current very restrictive regime.

Subject always to seeing the detail, we are opposed to the piecemeal development of tolling systems, forexample to fund an upgrade of the A14, while recognising that in the long-term there is may be a debate to behad about a large-scale plan to replace high fuel tax levels with road charges.

We are also keen to ensure that tolling does not lead to large operators paying less per mile than do smalleroperators. Taxes should remain the same as, for example, at present on fuel duty and VED—every operatorpays the same per litre and per vehicle.

We will shortly be embarking on a major information and opinion-gathering process, inviting views oneverything from the need for more paint on certain junctions to new road building.

21 June 2012

Written evidence from the Freight Transport Association

1. The Freight Transport Association is one of Britain’s largest trade associations, and uniquely provides avoice for the whole of the UK’s logistics sector. Its role, on behalf of over 14,000 members, is to enhance thesafety, efficiency and sustainability of freight movement across the supply chain, regardless of transport mode.FTA members operate over 200,000 goods vehicles—almost half the UK fleet—and some 1,000,000 liveriedvans. In addition, they consign over 90% of the freight moved by rail and over 70% of sea and air freight.FTA works with its members to influence transport policy and decisions taken at local, national, European andglobal level to ensure they recognise the needs of industry’s supply chains.

Introduction

2. Logistics is the foundation upon which other economic sectors depend and the consumer demands ofindividuals are met. Road freight remains the principal mode for moving goods within the UK, accounting for89% of inland freight moved. Anything the Government does that affects the road freight sector affects therest of the economy in terms of wider business competitiveness, and consumers in terms of product cost, choiceand convenience.

Business Activity and Confidence

3. The UK’s road freight sector currently faces a particularly challenging commercial environment, withbusinesses having to contend with rapidly rising fuel costs over which the have no control, and weak levels ofbusiness activity as the economy returned to recession in the first quarter of 2012.

4. FTA’s most recent survey of business confidence among its members, undertaken in April 2012,1

suggested that the stagnant or declining activity levels in domestic road freight seen during 2011 persisted intothe first quarter of 2012. Many of the sectors of the economy which are experiencing the sharpest contractionare freight intensive businesses such as construction. The impact of an economy in a very weak state has beenfelt most acutely by the third party transport sector. Hauliers report they have seen little or no growth in activityfor six consecutive quarters.1 FTA’s Quarterly Transport Activity Survey, April 2012

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5. Businesses report the international market for road freight has weakened markedly as the main Euro Areaeconomies either slow or go into recession. For UK carriers, business conditions are made tougher by thedepreciation of the Euro against Sterling since mid 2011, which has made Sterling-priced services relativelymore expensive.

6. Respondents report that their balance sheets remain fragile. Carriers are being squeezed by a combinationof downward pressure on rates and lengthening payment terms from customers, and upward pressure on costsand shortening payment terms from suppliers. The vulnerability of businesses is highlighted by insolvencystatistics, with the number of freight operators declaring insolvency steadily rising over eight consecutivequarters.

7. The difficult trading conditions have had a knock-on effect on business investment, with operators cautiousabout investing in new fleet resource. Order lead times for commercial vehicles (trucks and vans) and trailershave either remained unchanged or fallen in the past year. Operators are also continuing to cut back on theiruse of suppliers. A third of respondents to FTA’s April 2012 QTAS survey reported a decline in use of agencydrivers compared to a year ago.

8. Re-establishing economic growth should be the main policy priority for the Government. Without this,the public spending deficit reduction cannot be achieved. Whilst the UK economy is heavily dependent on thefuture of our principal trading partners in the Euro Area, the Government does have the ability to stimulategrowth. One way this could be achieved, at no net cost to the Treasury is through a modest reduction in fuelduty. The Government should engage in a national debate about the role of fuel taxation in the economy.

Taxation of the Road Freight Sector

Creating a fuel duty policy which reflects high world oil costs

9. The Chancellor’s announcement to postpone the planned fuel duty increase from 1 August 2012 has beenwidely welcomed by industry. Even when the recent fall in world oil prices are taken into account, diesel costsremain close to historic highs and represent nearly 40% of hgv running costs (and they are of course far higherthan in other EU countries). Moreover, the expectation amongst economic forecasters is the fall in prices islikely to be temporary. Over the whole of 2012, the National Institute of Economic and Social Researchanticipates crude oil prices will average $122 per barrel, and will rise to $132 over the period 2014–18.2

Fuel duty policy should recognise that for the foreseeable future, high and volatile world oil prices will stunteconomic growth and continue to make the long term viability of many haulage businesses uncertain.

10. Details of the fuel price stabiliser were confirmed in Budget 2012. The rationale for the mechanism isto provide a degree of dependability for industry and motorists when world oil prices are high and volatile. Asit is currently structured, the stabiliser pegs duty increases to inflation (rather than the default escalator dutyincrease of 1 pence per litre above inflation) when world oil prices are above $85 per barrel. The Chancellor’srecent decision on the planned August duty increase highlights that in its current form, the fuel price stabiliserdoes not go far enough. An upper bound of $100 per barrel for the Fuel Price Stabiliser should be introduced,above which fuel duty will automatically be frozen.

Incentivising low carbon transport fuels

11. The use of biofuels and gas offers an important way in which road freight transport operators can reducethe carbon intensity of their activities. Use of used cooking oil can be zero-rated for the purposes of calculatingemission factors,3 whilst use of dual fuel gas/diesel engines can offer a carbon saving of 15% based on atypical 60% diesel substitution rate. However, the Government’s policy towards low carbon fuels acts as abarrier to their take-up. A 20 pence per litre fuel duty differential for diesel derived from used cooking oil waswithdrawn in April 2012. Although RTFO credits were increased for this fuel, it is now commerciallyunattractive compared to conventional diesel. The Government is committed to a rolling three-year dutydifferential for gas compared to diesel. The time horizon for this commitment is insufficient and addsunnecessary investment risk for operators who typically retain vehicles for a five to seven year life. TheGovernment should review its policy of incentivising low carbon fuels and modify existing incentives to ensurethat these fuels are commercially viable for businesses to use.

12. Following dialogue with the freight sector in July 2011, the Department for Transport announced a lowcarbon hgv trial, as part of the Logistics Growth Review which is focussed primarily on encouraging the uptakeof gas powered hgvs. However, the £9.5 million competition, run by the Technology Strategy Board will bejudged on the merits of individual bids, rather than how bids can contribute to a vision of a comprehensivenetwork of gas refuelling hubs. Government should listen to industry’s needs in setting a low carbon fuel policyto ensure that the approach is coherent and recognises that different vehicle duty cycles will require differentfuel and refuelling hub solutions.2 National Economic Review 220, April 2012, National Institute of Economic and Social Research3 Defra Greenhouse Gas Conversion Factors, June 2012



Government’s Approach to Freight and the Strategic Road Network

Achieving reliable journey times

13. Journey time reliability is essential for businesses whose Just In Time processes are reliant on supplychains delivering stock and components when they are needed, rather than holding these in storage. Unplanneddelays on the road network can disrupt manufacturing processes and leave shop shelves empty. Journey timepredictability is equally important for freight operators in effectively deploying vehicles and planningschedules. Where disruptions to schedules occur, delivery slots are missed, with knock-on implications forvehicle positioning and subsequent use. The role of the highways authorities should be as road networkmanagers, rather than simply an asset provider. Reliability is often determined by the speed of response tounexpected incidents such as accidents and industry requires co-ordinated action from all stakeholders to clearaccidents quickly.

14. Where incidents occur that create unforeseen delays, fleet operators need reliable, real-time information.For its part, FTA supports its membership by giving up-to-the minute traffic information. Information on roadconditions is equally important, and this needs to be presented in a format which can be easily acted on bycarriers—for instance high winds affect certain types of vehicle before they impact on cars; and diversionsmust be thought through with taller and wider vehicles in mind if further accidents are to be avoided. Equally,the warnings need to be relevant and accurate, or these become devalued. Severe weather that goods vehicleoperators need to be aware of include very high winds, snow and ice, and fog or very low visibility. At timesof difficulty, such as extreme weather, there is often a risk that information is not shared sufficiently quicklyand efficiently and problems can be made worse. For information to be effective, a co-ordinated approachfrom all stakeholders is needed including different Government agencies, the police, and in certain caseslocal authorities.

Reliability of funding for new projects

15. But it is not just traffic incidents that cause delays—often it is simply that our infrastructure is unable tocope with the demands placed upon it. While traffic growth has been subdued in recent years, as the economyreturns to growth, so too will traffic. The Eddington Transport Study, commissioned by the Labour Governmentand published in December 2006 took a long term view of the UK’s transport needs. It concluded that althoughthe UK is already well-connected, there is a key challenge to improve the performance of the existing network.If demand is not met or managed, the study estimated that increasing congestion would result in an additional£25 billion of costs to the economy per annum by 2025 (compared with the costs of congestion in 2003).Although the study is now more than four years old, FTA believes that its conclusions remain valid.

16. While FTA considered the reductions in transport spending announced by the current Government apositive result given the scale of cuts being implemented elsewhere in Government, FTA and other businessgroups had previously demonstrated the need for transport spending to increase. Government needs to createa framework to enable future roads investment to be targeted at national trade routes where performanceremains poor and where freight traffic demand is expected to be greatest as the UK emerges from recession.

17. The Prime Minister recently announced a review of the ways that private finance could be attracted intoinfrastructure programs and the Department for Transport is currently working on proposals to make thisattractive to pension funds and other long-term capital investments. Implicitly this re-opens the debate on roadcharging and various forms of tolling. FTA welcomes this debate recognising that calls on funding foreducation, health and welfare take priority over infrastructure investment. In the long term a carefully designedroad pricing regime could be preferable to the blunt instrument of fuel duty as a means of paying for roads.However, this must not be additional taxation and important conditions would be required to secureindustry’s support.

18. Although the majority of freight continues to go by road, rail, air and water are playing an increasinglyimportant role and Government must ensure that capacity constraints do not unnecessarily hinder their furtherdevelopment. The Government statement of November 2011 on Strategic Rail Freight Interchanges was awelcome step forward to enable the development of the facilities the logistics industries needs to get road andrail services to integrate as seamlessly as possible. However as with all planning statements and initiatives thereal test remains implementation of such intentions at the local level when individual applications are made.The recent history of rail freight interchanges is too often one of general support nationally but rejection, bothby local bodies and by the Government, when an actual application is made. Commitment to supportapplications where they meet the needs of the logistics industry is required if we are to get the most out of thepossibilities of rail freight.

How the Industry is Regulated

19. FTA supports the way the industry is regulated through independent Traffic Commissioners and executiveagencies—notably the Vehicle and Operator Services Agency (VOSA), whose responsibility is to conductannual vehicle tests and enforce road worthiness, drivers’ hours and records. The combination of appropriateregulation and targeted enforcement means that the industry has a record of continually improving safetystandards.



Supporting drivers’ hours rules compliance

20. But regulation inevitably imposes a burden on business if it is not well thought through or if it is notapplied equally across the entire industry. For example, the requirements of the Working Time Directive formobile workers has imposed significant burden and cost on commercial vehicle operators even though it isdifficult to identify what specific safety risk has been mitigated by these regulations (against which DriversHours Rules do not already protect).

21. FTA supports therefore, efforts by Government to review the regulations businesses have to comply withand to extend this approach to any new proposals emanating from the EU. There is no evidence to suggest thatthe existing tripartite system of EU Drivers Hours, Working Time Directive and UK Domestic Drivers Hoursrules are in any way lacking in road safety terms. FTA welcomed the Department for Transport’s decision in2010 not to carry out a review of domestic drivers’ hours rules and the Department’s continued efforts inBrussels to defend any attempts to use the review of the tachograph legislation as a mechanism to change theDrivers’ Hours rules. The rules which affect the time which a commercial driver can spend behind the wheelare appropriate and any attempts to alter them further should be resisted.

Ensuring appropriate sanctions and targeting of non-compliance

22. Effective enforcement is essential to ensure that the non-compliant do not achieve a competitiveadvantage over those who do their utmost to comply. In the UK, VOSA has adopted a sophisticated andeffective targeting mechanism (the Operator Compliance Risk Score) to better apply its resources to thoseoperators in the operator licence regime who are at the greatest risk of non-compliance. Alongside OCRS,VOSA must have a strategy for those serially non-compliant operators who operate outside the o-licenceregime and must ensure that the sanctions it applies are sufficient to act as a deterrent to those tempted toavoid compliance.

Defending UK carriers from cabotage rules relaxation

23. The European Commission is committed in its 2010 Transport White Paper to further liberalisation ofthe transport market within the EU through relaxing restrictions on carriers from one Member State providingdomestic transport services in another Member State. A High Level Working Group has recently reported toCommissioner Kallas, and proposed a two-tier cabotage regime, which would see a considerable relaxation ofthe market compared to what has been negotiated by the previous UK Government. This would see the creationof “linked” cabotage, which would see no limits placed on cabotage for four days after the initial journey, and“non-linked” cabotage, which would be a pre-registered notice of possible cabotage operations following aninternational journey. The introduction of a UK vignette from 2015, whilst charging foreign carriers for thefirst time when using the UK road network, will not protect UK domestic carriers from the threat of moreextensive cabotage. The Government must resist moves to liberalise the cabotage market which would leavethe UK road freight industry vulnerable to cheaper competition, particularly from Eastern Europe.

Industry’s Role in Reducing the need for Additional Regulation

Cutting greenhouse gas emissions

24. FTA believes that in many cases, a voluntary approach can deliver more efficient, business friendlysolutions than would result from additional regulation. Carbon is a prime example of this. The logistics industrycan and should play a role in delivering cuts in greenhouse gas emissions, thereby contributing to UK nationaltargets. Cutting greenhouse gases goes hand in hand with improving the overall performance of the logisticsindustry, and therefore its contribution to supporting the wider economy.

25. Operators are best placed to identify and realise reductions in carbon emissions, and voluntary agreementsto cut greenhouse gas emissions should be the principal delivery mechanism for savings. In 2010 FTA launchedthe Logistics Carbon Reduction Scheme (LCRS) as a voluntary, industry-led response to the climate changechallenge evident at the intergovernmental meeting on climate change in Copenhagen in December 2009. TheScheme currently has in excess of 50 members including major third party logistics companies (DHL, TNT,Wincanton) and retailers (Tesco, Sainsbury, Asda, Boots, John Lewis Partnership), as well as modest sizedhauliers. Together Scheme members operate over 50,000 commercial vehicles. The principle behind the Schemeis that in the case of freight transport, industry is best placed to make and implement these actions, rather thanGovernment imposing additional red-tape and cost on companies through regulation, tax and artificial targets.

Truck Theft and Security Issues

26. Organised and opportunistic crime threatens the safety of truck drivers, and represents a significant costto operators in relation to vehicles and loads. Prior to its closure, TruckPol estimated that in 2010 the cost oftruck crime was around £52.2 million; comprising roughly equal losses of vehicles and loads.

27. A coordinated approach to truck crime across police forces is needed, if national organised criminalnetworks which are responsible for many incidents of truck and load theft are to be tackled. The work ofCrimestoppers and self-help industry networks needs to be supported by a publicly funded TruckPol servicethat offers a networking and intelligence sharing facility between police forces.



28. The benefits of secure overnight parking facilities go beyond reducing the risk of truck crime. Facilitieslocated close to the strategic road network encourage drivers to comply with statutory break and restrequirements and improve the image of the industry. New facilities should be well-lit and provide basicshowering and toilet facilities; furthermore they must be priced appropriately. The lack of commitment tobuilding secure lorry parking that pervades local authorities should be tackled through a national strategy fortruck parking and through the planning system.

27 June 2012

Written evidence from the Department for Transport

Thank you for asking me to give evidence to your inquiry into the road freight sector. I welcome this inquiry,as road freight is vital to the economy and it is important that this is recognised. The freight industry is a majoremployer in its own right, as well as providing essential support to other industries and keeping all of ussupplied with the goods we need to live our lives. This letter is not intended to set out everything theDepartment is doing in respect of the areas of particular interest to the Committee in this inquiry but rathersummarises some key initiatives.

The Government’s approach to road freight was set out in the Logistics Growth Review, which was publishedlast November. This identified key barriers to growth in the logistics sector and set out a range of measures toaddress those barriers. While these included issues for rail freight and ports, road freight remains vital, notleast in getting goods from ports and rail terminals to their destination. As well as supporting growth in theroad freight sector, and the economy as a whole, we are also taking forward measures which also address thesignificant contribution that road freight makes to carbon emissions, and to improve air quality. The measureswe are taking forward include investment in the strategic road network, trials of longer semi trailers and oflow carbon vehicles and infrastructure, as well as improved compliance and enforcement.

The Department has started work on a long term roads strategy, following Alan Cook’s independent reviewof the Network published in November 2011, which will set clear, long-term goals for the network that strikethe right balance between long term growth aspirations and individual user experience. We aim to consult atthe end of the year on the strategy, which will provide an essential piece of context for future policies as wellas providing the basis for defining our specific performance aspirations for the strategic road network.

Earlier this year we launched a ten-year trial of longer semi-trailers. This will include around 900 semi-trailers of 15.65 metres in length and around 900 are 14.6 metres long. The current standard length for semitrailers is 13.6 metres. This would increase the overall length of an articulated HGV to 18.55 metres, while themaximum permitted length for an HGV in the UK is 18.75 metres for a rigid truck/drawbar trailer combination,which are already in operation. Manoeuvrability tests show they perform as well as existing vehicles. Fewerjourneys will be needed to carry the same total volume of goods, as each trailer can carry more goods. Thetrial is expected to save over 3000 tonnes CO2 over ten years, with overall benefits estimated at £33 millionover ten years. Take-up of the new trailers has been rising steadily since allocations were confirmed in February.To date, Vehicle Special Orders have been issued for over 200 vehicles, which are now either on the road orunder construction.

The Government is funding a £9.5 million trial of low carbon trucks and their supporting infrastructure toencourage the uptake of heavy goods vehicles whose CO2 emissions are at least 15% lower than those emittedby equivalent diesel vehicles. The Technology Strategy Board is running a competition to award this funding.The competition closed last month and successful bidders will be informed over the summer. The trials willtake place over two years and data will be gathered and analysed to demonstrate the wider benefits of lowcarbon trucks such as potential savings on fuel costs. Investment in gas refuelling infrastructure through thetrials, which will be open to other operators, will help encourage other operators to consider using gas or dual-fuelled HGVs.

We continue to take compliance seriously, targeting our enforcement effort on both domestic and non-UKoperators to protect road safety and ensure a level playing field. Of the 54,757 UK vehicles examined fortraffic enforcement purposes in 2010–11, VOSA prohibited 9,272 16.9% for drivers’ hours and tachographoffences. Of the 67,316 non-UK vehicles examined, VOSA prohibited 10,162 (15.1%) for the same type ofoffences. In the same period, VOSA weighed a total of 4,792 vehicles, of which 2,759 (57.6%) vehicles werefound to be overloaded. Of the total vehicles weighed, 1,546 (58.3%) UK and 1,213 (56.7%) non-UK vehiclesand were prohibited. The upcoming interconnection of national registers implemented in every member stateas part of new EU rules on access to the occupation that came into force at the end of last year will help ourenforcement agencies continue to target the worst offenders.

Truck theft and security is an important issue which Home Office colleagues are most active in tackling.The Government recognises that road freight theft is a largely organised crime, involving networks ofindividuals through which stolen goods can be passed to realise their value. The Government is creating a newNational Crime Agency, which will enhance the fight against serious and organised crime, working closelywith local police forces to tackle the offenders involved in such crimes. The work the Department for Transportis doing to promote the use of secure lorry parking facilities offers a contribution to this issue.



The Department did much to ensure that the country entered the 2011–12 winter season well prepared, andhas acted upon the recommendations that have arisen from the various winter resilience reports published,including the report last year from the Transport Select Committee. We have been working closely with theMet Office to make sure we have the best advice available to prepare for possible weather impacts. The MetOffice for this winter launched improvements to the National Severe Weather Service which allows moretargeted forecast of potential impacts from severe weather.

July 2012

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