How is the Road Freight sector subsidized in the UK?

[cslusarc]

Moderator note: Split from

Royal Mail to cease using trains

It is reported in the Daily Mail yesterday evening (9th July 2024) that Royal Mail is to stop deliveries by railway. https://www.dailymail.co.uk/news/article-13617517/Royal-Mail-stop-deliveries-railway-200-years.html?ico=topics_pagination_desktop End of the line? Now Royal Mail to stop...

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[I'm from western Canada.]
How exactly is the Road Freight sector subsidized in the UK other than by using taxpayer funded roads?

 

[najaB]

How exactly is the Road Freight sector subsidized in the UK other than by using taxpayer funded roads?

Mainly it's the taxpayer funded roads. Heavy vehicles cause more wear and tear on the roads than cars, yet they pay the same amount to access the road network (that being zero) - we don't really do toll roads in the UK. This is in contrast to rail where there are both access charges and per-mile usage charges to pay for maintenance, with freight operators paying more than passenger.

 

[Nym]

Mainly it's the taxpayer funded roads. Heavy vehicles cause more wear and tear on the roads than cars, yet they pay the same amount to access the road network (that being zero) - we don't really do toll roads in the UK. This is in contrast to rail where there are both access charges and per-mile usage charges to pay for maintenance, with freight operators paying more than passenger.

Road Fund Licence Tax
Fuel Duty Tax
Value Added Tax on the Fuel Duty Tax
Value Added Tax on the vehicle
CPC Fees
etc
etc
etc

 

[Ediswan]

Mainly it's the taxpayer funded roads. Heavy vehicles cause more wear and tear on the roads than cars, yet they pay the same amount to access the road network (that being zero) - we don't really do toll roads in the UK. This is in contrast to rail where there are both access charges and per-mile usage charges to pay for maintenance, with freight operators paying more than passenger.

Not zero. Vehicle Excise Duty has to paid for most vehicles to use the public roads. This is a flat fee, no mileage element. Having noted that, if the charge was in proportion to wear and tear, heavy vehicles would have to pay far far more.

 

[najaB]

Not zero. Vehicle Excise Duty has to paid for most vehicles to use the public roads. This is a flat fee, no mileage element. Having noted that, if the charge was in proportion to wear and tear, heavy vehicles would have to pay far far more.

Yes, true. Didn't consider that. VED raises something on the order of £7.5B, where HGVs represent less than 2% of vehicles in the UK so, even assuming that they all pay the highest rate of VED and HGV Road User Levy they contribute less than £1B of that total.

Government expenditure on roads is on the order of £11B per year.

 

[renegademaster]

Mainly it's the taxpayer funded roads. Heavy vehicles cause more wear and tear on the roads than cars, yet they pay the same amount to access the road network (that being zero) - we don't really do toll roads in the UK. This is in contrast to rail where there are both access charges and per-mile usage charges to pay for maintenance, with freight operators paying more than passenger.

Railfreight doesn't pay as much fuel duty however.

 

[Egg Centric]

Road Fund Licence Tax
Fuel Duty Tax
Value Added Tax on the Fuel Duty Tax
Value Added Tax on the vehicle
CPC Fees
etc
etc
etc

Yup, the idea that it's HGVs vis a vis rail freight that are subsidised is laughable. HGV taxation (including the above especially fuel duty) is more or less the same as the entire roads budget. Compare freight access charges to network rail expenditure...

 

[Trainbike46]

Yup, the idea that it's HGVs vis a vis rail freight that are subsidised is laughable. HGV taxation (including the above especially fuel duty) is more or less the same as the entire roads budget. Compare freight access charges to network rail expenditure...

fuel duty is an implicit carbon tax; electric rail freight pays the same in the form of the carbon tax paid by electricity generators

Diesel freight is not relevant as royal mail was not using that anyway.
Below is an overview of the taxes paid by ELECTRIC rail freight, as well as diesel HGVs. Feel free to add if you feel I missed a tax or charge, but remember, business don't pay VAT on goods and services (more accurately, they claim it back), so that is not included. Similarly, CPC fees are a cost associated with training staff, a cost which rail also has (though in a different ways), and road fund licence tax is a different name for VED.

To me, it seems that road haulage is getting an unfair advantage by having VED rather than infrastructure usage charges like rail.

	Electric rail freight	diesel HGV
carbon tax	UK ETS (on electricity generation)	Fuel Duty
infrastructure usage charges	Track Access Charges	-
"owning a vehicle" tax	-	Vehicle Excise Duty

 

[En]

Mainly it's the taxpayer funded roads. Heavy vehicles cause more wear and tear on the roads than cars, yet they pay the same amount to access the road network (that being zero) - we don't really do toll roads in the UK. This is in contrast to rail where there are both access charges and per-mile usage charges to pay for maintenance, with freight operators paying more than passenger.

factually incorrect as others have pointed out while road operators do not pay per mile the vstest majority of road haulage is by diesel powered vehicles whch in road use have to use 'white' duty paid diesel and then there is the VAT on duty aspect , although of course many hauliers are vat registered ...


there is an argument that VED , although NOT directly funding the road network is too low for Large Goods vehicles compared to the wear they impose on the roads and when compared to the track access chrages paid by Goods operators on the railway

https://assets.publishing.service.gov.uk/media/64ca1f035c2e6f0013e8d967/v149x1-rates-of-vehicle-tax.pdf

== Doublepost prevention - post automatically merged: 11 Jul 2024 ==

fuel duty is an implicit carbon tax; electric rail freight pays the same in the form of the carbon tax paid by electricity generators

Diesel freight is not relevant as royal mail was not using that anyway.
Below is an overview of the taxes paid by ELECTRIC rail freight, as well as diesel HGVs. Feel free to add if you feel I missed a tax or charge, but remember, business don't pay VAT on goods and services (more accurately, they claim it back), so that is not included. Similarly, CPC fees are a cost associated with training staff, a cost which rail also has (though in a different ways), and road fund licence tax is a different name for VED.

To me, it seems that road haulage is getting an unfair advantage by having VED rather than infrastructure usage charges like rail.

	Electric rail freight	diesel HGV
carbon tax	UK ETS (on electricity generation)	Fuel Duty
infrastructure usage charges	Track Access Charges	-
"owning a vehicle" tax	-	Vehicle Excise Duty

especially given the rates of VED for large goods vehicle compared to large engined private cars

 

[Egg Centric]

fuel duty is an implicit carbon tax

Fuel duty has been around longer than we knew about global warming and is *way* more than any carbon tax. A litre of diesel produces 2.67kg of CO2 and is 53p in duty. Equates to, essentially, £200/ton of CO2.

Now you can argue how much a ton of CO2 should be charged at - you can offset it for about £1 (imo the more reasonable comparison), or alternatively you can compare it to our carbon credit market which is currently trading at about £40, but either way claiming that it's a carbon tax is just post hoc justification.

there is an argument that VED , although NOT directly funding the road network is too low for Large Goods vehicles compared to the wear they impose on the roads and when compared to the track access chrages paid by Goods operators on the railway

You can certainly make the argument that road prices fall disproportionately on the private motorist versus the amount of damage they do V HGVs, but it doesn't change that HGVs are paying their way.

 

[railfan99]

You can certainly make the argument that road prices fall disproportionately on the private motorist versus the amount of damage they do V HGVs, but it doesn't change that HGVs are paying their way.

It will depend on the gross vehicle mass and arrangement, but that a heavy road vehicle can cause up to 10,000 times more road damage than a private car is a statistic I recall from years ago.

 

[Egg Centric]

It will depend on the gross vehicle mass and arrangement, but that a heavy road vehicle can cause up to 10,000 times more road damage than a private car is a statistic I recall from years ago.

I think it's to do with the 4th power of the axle weight or something crazy like that.

All I'm saying is that if the total roads budget is X and HGVs pay X in tax, while other road users pay 3X in tax, then even if 100% of damage on the roads is by HGVs they've still paid their way, even if a proportional tax allocation would be something like 3X HGV: 1X everyone else.

 

[najaB]

You can certainly make the argument that road prices fall disproportionately on the private motorist versus the amount of damage they do V HGVs, but it doesn't change that HGVs are paying their way.

HGV owners pay a maximum of c 12% of the total amount of VED + Road User Levy (on the assumption that they pay the highest rate of both), but there's no way they're responsible for only 12% of the wear and tear on the trunk network.

 

[Dr Hoo]

HGV owners pay a maximum of c 12% of the total amount of VED + Road User Levy (on the assumption that they pay the highest rate of both), but there's no way they're responsible for only 12% of the wear and tear on the trunk network.

Why are you restricting it to the Trunk Network? From a Peak District/Derbyshire perspective there are plenty of HGVs of stone, cement and lime on non-trunk roads for example.

 

[coppercapped]

This all seems like railway people claiming that they are hard done by…

This ‘fourth power law’ which implies that the damage to a road surface depends on the fourth power of the wheel load dates back to work done by the American Association of State Highway Officials in the early 1950s. A test track was built consisted of several loops, each with two lanes and these were surfaced with both asphalt and concrete of varying thicknesses. Trucks with different axle loads then drove around the loops almost continuously for two years and the deterioration of the road surface assessed.

These tests were carried out over 70 years ago and the results are based on road construction techniques used in the USA at the time. As far as I can find out they have never been repeated using more modern road foundation construction methods (not just trying different thicknesses of the surface layers) or using vehicles with newer designs of tyres and suspensions - especially the air suspensions used in almost all European lorry and trailer designs today or allowing for different climate and weather conditions

If the foundation is constructed to meet the expected load and number of stress reversals then the rate of deformation of the surface can be slowed. As an example, the slow lanes of the Autobahnen in Germany used to be heavily grooved when I went to live there in the mid 1970s due to the number of heavy trucks driving nose-to tail. Getting one’s car’s wheels in one or the other grooves - it was never both as they were wider apart than the track of my car - was disconcerting and potentially alarming as the grooves could fill with some centimeters of water after rain or snow presenting all the dangers of ‘aquaplaning’. Over the years the foundations of the ‘slow’ lanes on almost all the older Autobahnen have been rebuilt and these days it is exceptional to find these ‘Rinnen’ in the road surface although both lorry weights and numbers have increased. Of course the newer roads were built to the higher standards from new.

None of this is to say that a properly designed road surface will last forever - after a given number of stress cycles the surface will fatigue and crumble aided by water and frost. This is no different to the railway experience where to cope with higher speeds, loads and train frequencies ballast depths have been increased, the number of interruptions in the rail surface (e.g., rail joints) have been reduced and the alignment tolerances tightened.

My point is that if designed to meet the task the rate of deterioration of the surface can be controlled. Claiming that HGVs do not pay sufficient tax based on test results made over 70 years ago in a completely different environment is very weak argument.

 

[Egg Centric]

HGV owners pay a maximum of c 12% of the total amount of VED + Road User Levy (on the assumption that they pay the highest rate of both), but there's no way they're responsible for only 12% of the wear and tear on the trunk network.

I'm clearly struggling to get across what I'm saying. I am not trying to say that what HGVs pay is "fair". What I'm saying is that they pay (give or take) for the full costs of the roads by themselves and consequently are not subsidised. The reason I can say the former is that the amount they pay towards the roads is roughly the whole roads budget.

There is a legitimate case that HGVs should pay more towards it but you can't call this "subsidy" IMO.

 

[najaB]

What I'm saying is that they pay (give or take) for the full costs of the roads by themselves...

Oh what basis? If you're including fuel duty, that doesn't "pay for roads". It pays for schools, hospitals, F-35s, etc. Only a tiny portion of it goes to pay for roads.

 

[railfan99]

If the foundation is constructed to meet the expected load and number of stress reversals then the rate of deformation of the surface can be slowed. Of course the newer roads were built to the higher standards from new.

None of this is to say that a properly designed road surface will last forever - after a given number of stress cycles the surface will fatigue and crumble aided by water and frost.

'Gold plating' for heavy road vehicles costs governments a lot.

Essentially this significant extra capital expenditure is paid for by private motorists and those who don't drive.

 

[HSTEd]

Oh what basis? If you're including fuel duty, that doesn't "pay for roads". It pays for schools, hospitals, F-35s, etc. Only a tiny portion of it goes to pay for roads.

It just as much funds the roads as vehicle excise duty does.

It is tax income that would not exist if road haulage did not exist, so if you wish to exclude the spending on the roads you must exclude that as well.

HGV tax income covers something like a third to a more than half of the total cost of the road system. They pay something like £4.5bn in fuel duty and VAT alone £7bn in tax revenue, excluding payroll or similar taxes.

It easily covers the entire cost of the Strategic Road Network, which carries the vast majority of HGV mileage in any case.

EDIT:
Got the figure wrong, something like £7bn per year for HGVs, or more than half the cost of the system.
I did the calculation in this post. And didn't even include all the taxes Nym proposed including above.

 

[Egg Centric]

Oh what basis? If you're including fuel duty, that doesn't "pay for roads". It pays for schools, hospitals, F-35s, etc. Only a tiny portion of it goes to pay for roads.

So? Same is true of almost every tax, including VED.

The question is whether road freight is subsidised.

If road freight is subsidised, then in the course of its operation it would be paying more or less in tax than its "share" of the costs of road maintenance/building/etc.

If that was true for road freight in general, then it would certainly be true that HGVs - as part of road freight - would in the course of their operation be paying more or less in tax than the entire road freight's industry "share" of the costs of road maintenance/building/etc

But we don't even have to decide what that share is. HGVs alone are paying in tax pretty much the entire cost of the roads.

Road freight is simply not subsidised by any reasonable definition of subsidy.

 

[Meerkat]

Over the years the foundations of the ‘slow’ lanes on almost all the older Autobahnen have been rebuilt and these days it is exceptional to find these ‘Rinnen’ in the road surface although both lorry weights and numbers have increased.

Some of our motorway slow lanes are horrendously rutted - i often end up in lane 2 to avoid it.
When I was driving in Germany the A road equivalents were much smoother than ours but almost all were rutted - as you say quite alarming when they become rivers……