Thank you for inviting me here today (22 October 2013), I’m very pleased to have this early opportunity of meeting you. Three years later than expected.
Freight transport is essential to the effective functioning of the country. It ensures that supermarket shelves remain stocked, medical supplies and post get to where they are needed when they are needed; factory floors are supplied with equipment, and UK businesses have access to overseas suppliers and can sell UK goods abroad.
The UK freight and logistics sector is therefore vital to economic growth and prosperity. It is worth around £75 billion to the economy and employs over 2 million people across 190,000 companies. It delivers the country’s core needs (food, oil, coal, hospital supplies); facilitates industrial and manufacturing sector (imports and exports) and ensures the service sector can thrive through supply of consumer goods. Efficient freight transport is vital for efficient business.
Of course, you all know this, and the government does too.
The Logistics Growth Review, back in November 2011, set out our position on the importance of the freight sector. This made clear that facilitating conditions for growth in the logistics sector is critical to the government’s growth agenda. It included a wide package of measures to target real barriers to growth identified by businesses across the sector which we have been taking forward.
We have made significant investment in increasing rail freight capacity: over £400 million between 2009 to 2014 and over £200 million agreed for 2014 to 2019.
To give just 1 example: the Felixstowe to Nuneaton (West Coast Main Line) capacity scheme (£52.8 million) for Control Period 4 (to April 2014) is designed to deliver 16 additional freight paths per day in each direction, enabling rail to accommodate part of the growth arising from the expansion of the Port of Felixstowe.
The road network is vital to our economy. Since the late-1980s, more than 60% of goods moved have been transported by road.
In the June Spending Round we announced transformational investment in our road network and reform to the status of the Highways Agency.
We have committed investment of over £24 billion in this and the next Parliament. This should deliver 52 new national road projects and will triple annual investment on road enhancements from today’s levels to over £3 billion by 2021.
Over 400 extra lane miles of improved motorways’ will be added, linking existing stretches to create a new ‘smart motorway’ corridor between the North West, Birmingham and London.
And we will invest more than £9 billion in maintaining our national road network
The M62 J25 to 30 scheme near Leeds in South Yorkshire is now fully operational. A number of other schemes are already under construction, including the widening of the A23 between Handcross and Warninglid in West Sussex, and dualling the A11 Fiveways to Thetford in East Anglia, with completion expected in 2014 to 2015.
The plans for the Highways Agency will see it turned into a publicly owned company with long term funding certainty, ending decades of underinvestment and uncertainty in our road network, making sure money goes where it is most needed and schemes are backed from design to completion.
Commercial vehicles are the basis of the sector. A trial of longer semi trailers is now well under way. Longer trailers enable freight companies to transport more goods, more efficiently, and should give significant economic and environmental benefits. We want to maximise their use during the trial to ensure we properly assess the benefits therefore we have recently changed the allocation procedure to better match supply and demand, on a first come first served basis so that the trailers can be used by the operators who are ready to use them.
Since we made the change, we have had requests for over 500 semi-trailers, from operators who are ready to place their orders with manufacturers within the next 6 months, in addition to the 550 that had already been authorised since the trial started last year.
Heavy goods vehicles are responsible for around 20% of green house gas emissions from domestic transport.
We have set up a joint government and Industry Low Carbon HGV Technology Task Force with the aim of promoting the use of fuel efficient, low emission road freight technologies.
We have also launched a low carbon truck trial, which will support over 300 low carbon HGVs, (with around 130 already on the road and the remainder coming soon) and a number of gas refuelling stations that will be open to other operators. The trial aims to demonstrate the wider benefits of low carbon trucks, such as the potential for reduced running costs through fuel savings for operators, and will provide crucial evidence that will link with the government’s ultra low emission vehicle (ULEV) strategy which was been broadened to include heavier vehicles.
We are working on our new guidance on quiet out of hours deliveries, which will improve flexibility for freight operators and their customers and relieve peak hour congestion on busy high streets. We will be issuing this soon and disseminating it to all the sectors involved, including freight operators, retailers, local authorities and community groups.
We will continue to work with the freight industry to identify priorities where we can do more to help the sector develop and support the wider economy.
The HGV Road User Levy Act has now become law, and we will introduce the levy from April 2014. This will be set at £10 per day for the largest trucks.
The levy is being introduced to ensure a fairer arrangement for UK hauliers.
At the moment there are charges for lorries in almost every European country, yet foreign HGV drivers pay nothing to use UK roads. The HGV road user levy will correct that imbalance and ensure that foreign hauliers pay a contribution whenever they use UK roads and we will introduce other measures to be introduced at the same time to ensure that more than 9 out of 10 will pay no more than now.
We know that the freight sector is very competitive with many small firms and narrow profit margins.
In recognition of the impact that persistently high prices have on business costs the 1.89 pence per litre fuel duty increase planned for 1 September was cancelled.
Fuel duty has now been frozen for nearly 3 and a half years, the longest fuel duty freeze for over 20 years. As a result of government actions, average pump prices are 13 price per litre lower than if we had stuck to the previous government’s plans.
Cancelling the September increase will save a typical haulier £750 per year.
Budget 2013 announced that vehicle excise duty would be frozen for HGVs meaning that hauliers have been benefiting from frozen VED rates since 2001.
In 2013 to 2014 the HGV rates would be around 45% higher if they had increased with RPI since 2001 and around 12% higher if they had increased with RPI since 2010.
In 2012, there were almost 300,000 people employed as large goods vehicle drivers in the UK. Driving is a skilled and safety-critical activity and we welcome the work being done by the industry to increase the recognition of it as a worthwhile job. We are committed to doing our part, for example working with industry to enable people with skills acquired in the military to make the most of their potential in civilian driving.
We continue to press for the right European-wide rules, the right level of discretion for the United Kingdom and the right interpretation of the European rules. So for example we have just laid a regulation to amend who is in-scope of driver CPC. This means that some drivers who drive infrequently as part of their job will not need to hold a CPC. This change represents a saving to the industry of nearly £24 million per year.
We continue to negotiate to avoid excessive European requirements for roadworthiness testing. There are still some risks of disproportionate costs including related to caravans, but I am pleased that some of the potential impositions have been stopped.
I know that there are a number of issues that concern you.
We are continuing to modernise our motoring services. Our aim is to deliver a better service and at less cost to you as fee payers. I know that some of these changes are causing issues for you. Both short term issues to do with the transition from one way of delivering a service to another. But also longer term issues about your continuing confidence in the integrity and quality of the service. I am always grateful for feedback on how we deliver our services – because that is what enables us to identify and make the changes that really matter to you as customers. I’ll be working with colleagues to address those that you’ve raised.
Our proposed option for a new commercial model for the Vehicle Certification Agency (VCA) is to create a new company in a joint venture with a private sector partner. The Secretary of State for Transport will be a minority shareholder in the new company and will retain the position of UK Type Approval Authority. All of the services currently offered by VCA, including those considered by industry to be a “one stop shop”, will continue to be delivered by the new company. A prime objective for this project is to ensure VCA’s well-deserved international reputation for integrity and the delivery of high-quality services is maintained.
The new company will be established so that there will be a seamless transfer of responsibilities from VCA and although customers will obviously see some differences, the VCA’s capacity and quality of service on offer will not be impaired in any way
I understand the concerns of the industry regarding problems when booking an appointment for an individual approval inspection. The Vehicle and Operator Services Agency (VOSA) who are responsible for the inspections are working closely with the trade bodies, especially the SMMT, to identify and address concerns.
VOSA has implemented a number of measures including additional administrative and technical staff to boost capacity.
At the moment VOSA staff operate from 17 privately owned inspection facilities and plans to open 3 more VOSA sites are well advanced.
Despite introduction of the requirements in 2009, many manufacturers and builders have only recently had their first encounter with the type approval requirements and VOSA staff spend a lot of their time providing expertise and support. We recognise this is a difficult and demanding area.
Individual approval inspection remains very cost-effective route to registration for use on UK roads and VOSA staff will continue to provide assistance to help customers through the process.
We know that the freight and logistics industry is vital to the UK’s economy and I look forward to hearing more about the issues that matter to you.