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Public domain

Michael Cross
Thursday March 10, 2005
The Guardian

Once again, the government is turning to the global IT industry to dig it out of a policy hole. It plans to spend hundreds of millions of pounds on a system to remove money from lorry owners' pockets and then pay most of it back, via another pocket.

In the mad world of modern tax administration, it makes a kind of sense. As a piece of public policy, however, it is far from ideal.

The lorry road user charge (LRUC) scheme will enable the government to tax heavy goods vehicles according to the mileage they do on Britain's roads.

Last week, HM Customs and Excise shortlisted seven suppliers, including Capita, IBM and Siemens, for contracts to set up and run the system.

The successful bidders will supply onboard devices that will measure the distance travelled and relay the data to Customs systems.

The exact technology has yet to be decided, though it is likely to involve a combination of GPS satellite tracking and data exch-ange through packet-radio links.

So far, so good. However, the scheme's aim is not to encourage freight transport back on to the railways, but to appease the road haulage industry.

Most of the charges collected will be paid back as rebates on fuel duty. As this will favour hauliers based in the UK, it will level the competition between British truckers and firms that fill up their lorries with cheaper continental diesel.

And all this because complaints about unfair competition from foreign hauliers were one factor in the great political trauma of the first Blair administration - the fuel protests of September 2000.

To prevent a recurrence of the protests, while maintaining the policy of escalating fuel taxes, the 2002 budget announced that the LRUC would be introduced.

The procurement has not been particularly rushed - the contract is due to be placed later this year, with the first tolls coming into force in January 2008.

If all goes well, that is. The contract is divided into three "service packages", which will be awarded to different firms: one for data services, one for central services and one for enforcement.

Several policy questions, however, are still open for consultation. One is the question of exemptions, for fire appliances and the like. Another is whether the charges should be varied according to the time of day, to encourage lorries away from peak hours. The government likes the idea, but the road haulage industry hates it.

Truckers also want the charge to be "revenue neutral" - fuel rebates and charges should balance out. This may be a forlorn hope.

Finally, they want the onboard technology to be capable of use with tolling systems in other EU states - Austria, Germany and Switzerland have similar schemes.

Wouldn't it be simpler just to harmonise taxes? Perhaps. But one of the main reasons for interest, not least among IT contractors, is that LRUC will be a test bed for national road charging for all users. If that's the government's thinking, it should be open about it.

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