Making roads pay their way

Road tolls are a necessary evil for haulage firms the world over and none more so than for those operating within the EU. Our road networks are clogged with juggernauts transporting freight across international roads and paying a hodge podge of toll charges for the privilege. The EU Parliament, however, has finally rubber stamped the European Commission’s amendments to the Eurovignette Directive – a controversial framework for road charging. Ultimately, EU legislators want the train to take the strain with more freight being transported by rail, as well as the waterways. It is also hopes that the Directive will slash €100 billion a year off the cost of congestion. EU chiefs also want to see revenue pumped back into EU transport, but this is not compulsory, and critics argue that it won’t remedy decades of underinvestment in the road networks.

Currently, road charges for heavy goods vehicles (HGVs) vary widely across member states – both in the amount charged and system used to calculate the levy. The amended Directive, first tabled in 2003, will enable members to vary tolls based on a lorry’s size, weight and environmental friendliness, in the priciples of ‘user pays’ and ‘polluter pays’. Crucially, the updated Directive will allow tolls to apply to all roads of the trans European network (TEN) and not just motorways. It will also allow EU Member States, as of 2012, to levy charges on vehicles of 3.5 tonnes or more – considerably less than the 1999 version of the Directive, which only applied to vehicles of more than 12 tonnes. Haulage firms will face mark-ups by as much as 25 percent in particularly sensitive mountainous regions.

CRITICISM

Despite these promises, the Directive has been slammed in some quarters for allowing Member States too much flexibility on how they spend the toll money. The International Road Transport Union (IRU) believes that the money raised from Eurovignette will never be reinvested in the roads in order to reduce congestion and free up bottlenecks. “Member States demanded and were able to maintain absolute autonomy in the way they choose to allocate the revenue raised from tolls,” says Hubert Linssen, IRU General Delegate to the EU. “All that the final Directive contains is a strong recommendation that toll revenue should be used for transport spending in general and for the benefit of the road infrastructure from which it was raised. We lobbied hard to secure at EU level a strict earmarking of funds to remedy the decades of underinvestment in our congested and incomplete EU road network.

“However, since Member States forced through their position it is now up to our national associations to fight this battle with governments. In the same way that media and political pressure is squarely on privatised railways to invest in infrastructure and to deliver value for money to rail passengers, commercial road transport should be able to expect the same support and pressure for a just return on their tolls. Unfortunately we fear that it is more likely that road tolls will simply become another source of income to prop up government spending deficits,” says Linsson.

The European Commission argues, however, that Eurovignette is a fairer road charging regime, overall. Commission Vice President Jacques Barrot, who is responsible for transport policy, announced recently: “I welcome the adoption of the Directive which has been the subject of tough discussions between the Member States and Parliament. With the possibility of differential tolling and introducing toll ‘mark ups’, this new framework represents a major step towards fairer and more efficient transport infrastructure charging.”

The Commission says transport users will gradually assume responsibility for the costs generated by their activities, the aim being to reduce pollution and congestion and generate additional funding for investment in transport infrastructure. It is hoped that the new Directive will lead to better calculation of tolls and put an end to the current situation, which results in unfair treatment for operators on the different road networks. The Commission says it also establishes thresholds for tolls and user charges to ensure that they are fair, proportionate, transparent and non-discriminatory, and set up a structure for the application of discounts for frequent users. These improvements should make it possible to reduce obstacles to the free movement of goods and guarantee fair competition between operators.

EXTERNAL COSTS

Since its conception, the Directive has been criticised by Member States on the periphery of EU transport routes – Portugal, Estonia and Malta compared with those countries suffering from high congestion and pollution such as France, Germany and Austria. Another contentious aspect of the Directive is that it does not allow members to charge in principle for so-called ‘external costs’. These are expenses cause by the road freight system and can include environmental and congestion costs, landscape damage, noise and indirect accident costs not covered by insurance. “Overall we think it is still quite sad that the Directive does not allow member states in principle to charge for the environmental, safety and congestion costs or road freight transport,” asserts Jos Dings, Director of the European Federation for Transport and Environment. “In a technical term, these are the so-called external costs. It is quite a well-known economic principle that it is a very good idea to charge for these external costs. The directive does not yet allow for that and we think that it is a big mistake.”

Despite these criticisms, Dings says the new Directive does have its upsides, however. “The current version of the directive is certainly an improvement compared with the six-year-old version that it replaces,” he explains. “It is now possible for member states to levy tolls on all roads, rather than just motorways and that is, I think, the most important change. Also member states are required to vary tolls according to the environmental impact and to the time of the day so that it at least reflects the price structure of these external costs. These are welcome editions and changes to the old version.”

CONGESTION

The burning question on everyone’s lips though, is whether this really is going to slash congestion and pollution? After all, how much of the traffic on the roads is caused by haulage vehicles? The IRU believes the scheme will have a negligible impact. It says that congestion on EU roads consumed an extra 12 billion litres of fuel, generating a further 30 million tonnes of carbon dioxide. “In terms of a reduction in congestion and pollution the IRU does not believe that the application of the Eurovignette Directive will make any profound impact in terms of road congestion or pollution,” explains Linssen. “Indeed how could it when only one in 12 vehicles on the road are goods transport vehicles within scope of the Directive. Even if the proportion of commercial vehicles on the road were multiplied by a factor of ten, peak hour toll premiums will not remove congestion or change behaviour but simply make the industry absorb more costs.”

Linssen also points out that the constraints of delivery timetables and the raft of driving legislation will prevent a reduction. “The reason is simply because the time of the day when road transport operators make use of the roads is not a matter of personal choice,” he says. “Journey times are bound delivery timetables which are in turn are restricted by EU working time limitations and subsequently the difficulty that shippers have to find warehouse staff who will work during off peak hours to despatch or take delivery of freight. Other factors to contend with are night time delivery bans and countless other driving restrictions in place.”

And what about the railways and shipping industries? Will they suddenly see a rush of business coming their way? “We have regularly said in the past that the most important impact of road charging will not be a shift to rail, although it is one of the impacts,” says Dings. “The most important impact is that road transport will organise itself in a more efficient way. It will use cleaner trucks and if you give them lower fees compared to dirty trucks they will reduce empty driving and combine smaller loads into one large one.” Dings continues: “It will primarily have an impact on the efficiency and environmental performance of road freight. Only secondarily it might lead to a shift in some markets but we should not have too high expectations. If you think that it is the only major response then you are mistaken because you ignore the most important benefits of road charging.”

TAX BREAKS

Critics are also concerned that haulage businesses could be crippled by Eurovignette because they will not be able to offset the charges through reductions in road and fuel tax. These are hard times for the haulage industry. It faces new driving and rest time rules, strict driver training obligations and rocketing fuel prices. The IRU argues that road haulage sector has paid more than its fair share in taxes and should not have to rely upon individual governments to invest in the road repairs and improvements – Eurovignette should do that. The IRU says that every year EU road users pay €330 billion in taxes, but public spending on roads amounts to just €100 billion.
With this in mind, those opponents want to see governments compensate firms for the new tolls. “The road transport industry has always more than paid its way through its contributions via vehicle and fuel taxes,” explains Linssen. “Moreover, it was a stated aim of the Directive not to increase the overall fiscal burden on road transport operators. The Directive says that Member States may offer reductions in fuel duty and vehicle taxes to compensate for road tolls. However, there is no compulsion in the Directive as the IRU would have liked nor is there any real scope for meaningful compensation.”

Despite all the arguments and intense negotiations Eurovignette a harmonised road-charging scheme on the TEN should soon be here. Whether the new Directive shifts more freight to rail and the waterways and cuts congestion and pollution remains to be seen. And, of course, Member States being encouraged to earmark revenue from tolls for better transport infrastructure has raised concern amongst the hauliers too. But with road still being the prime route for transporting goods between European neighbours, the individual governments would be ill-advised not to plough money back in their road networks. Despite all this, EU chiefs are confident that the Eurovignette Directive will mean fairer tolls and less congested, cleaner and quieter roads. They just have to win over those critics.