Rod McKenzie, Executive Director of Communications at the RHA explains his thoughts and views regarding the return of the HGV Levy.
When Chancellor Jeremy Hunt unveiled his budget – one of the horrors lurking in his red box was something that the RHA feared: the return of the HGV Levy. It was suspended in August 2020 to aid recovery from the pandemic for our sector – which we supported.Now it’s back in August this year – at a time when the industry is facing severe cost pressures. To put it mildly, the timing is rubbish: especially a time when struggling small operators will be disproportionately affected.There will be changes about how the levy works. When it first came in the levy paid varied according to weight and axles and Euro standard: in 2019, a Euro VI paid a lower rate than Euro III, IV and V – from August axle numbers are not a factor. So the charge is now based on environmental and air quality damage rather than road surface wear and tear. To be fair, that was in line with government plans back in 2012.But it’s another tax. Another burden on a hard-pressed industry. The RHA cost survey last year showed an increase of 20% for running a single HGV. What’s even more disappointing is the levy is no longer focussed on maintaining essential road infrastructure that the supply chain relies on.On the plus side, the changes mean it’s easier to calculate this tax. Only 6 rates – as opposed to 22. It’s likely cost per vehicle will be lower. The highest rate payable drops from nearly a thousand pounds to £749. But some operations will see a significant increase – as ever, there’s always a catch.
So it’s now all about the environment. Fair enough, in that the RHA supports incentivising a switch to cleaner vehicles. But – and it’s a big but – SME’s need support in making that switch. At a time of tight cost control, shrinking margins and dwindling profits why should smaller operators have to spend more upgrading fleets to avoid high charges under the levy? At the very least we think the levy should be cost neutral for hauliers who have made the switch to Euro VI.
The overarching aim of the levy is a fair one: making sure that foreign HGV’s using our roads pay their way for the damage they cause to them. But we believe now is not the time to clobber UK hauliers with extra costs.
That’s why we, at the RHA urge the government, even at this late stage, to postpone the reinstatement of the levy. It’s not the right time, for the economy, for supply chains, for our members. Responsible and hardworking UK hauliers should not be out of pocket at a time when the economy needs every green shoot it can find.
No wonder costs are so high