Parliament Transport: Lorry firms `crippled' by tax increases

THE TORIES stepped up their attack over the increases in fuel and road taxes for the haulage industry yesterday as ministers prepared to meet angry lorry drivers next week.

Gillian Shephard, the Shadow Transport Secretary, said that the Government's policy was threatening at least 50,000 jobs in the industry because petrol was now the most expensive in Europe. Opening a Tory-led debate on the Government's transport policy, she warned that many companies would be forced to establish themselves abroad to compete with their Continental rivals.

"Of course some haulage companies cannot afford to move abroad. They will go out of business," she said.

"The Government has broken their pre-election promises on transport. There have been no immediate benefits for the travelling public. Their answer to transport problems is to tax the motorist off the road and put hauliers out of business."

Lorry drivers have already threatened to stage an organised traffic jam in London on Monday to protest against the increases in duty on diesel fuel.

To avert the worsening crisis, Downing Street confirmed that John Reid, the Transport Minister, would discuss the industry's concerns at a special meeting next week.

Similarly, Tony Blair has given his assurance that he understands the problems faced by the industry, and ministers are looking at measures to soften the impact of the increases.

But Dr Reid dismissed suggestions that British hauliers were at a disadvantage compared with Continental firms, saying that they would benefit from the Government's cut in corporation tax.

"Anyone who claims that the policies in the Budget will force hauliers abroad should look carefully at their facts," he said.

"When the whole costs of operating are added up, the vast majority of hauliers would be worse off abroad and there is some evidence that foreign- owned companies are setting up in the UK. The UK has lower overall costs and less red tape."

The best way to help hauliers was to create a climate of sustainable economic growth and long-term investment in the business.

"The Budget included measures which benefit hauliers. We froze road tax for 98 per cent of all lorries, we cut corporation tax, we doubled the maximum road tax concession for reduced pollution lorries to pounds 1,000 and we increased the duty incentive to use ultra-low sulphur diesel and cleaner road fuel gases."

While Steven Norris, the Road Haulage Association chief, welcomed the meeting with Dr Reid, he made clear that this was a matter for the Treasury.

"The Government must give an indication that there will be genuine review of the Draconian rates of taxation that are crippling the industry," he said.

Eddie Stobart, Britain's best-known lorry company, based in Carlisle, Cumbria, has said that it will register up to half its vehicles abroad as a result of the rises in excise duty.