- EU Driver Benefits
- New Car Prices
- Car Servicing
- Car Safety
- VAT on Fuel
- Sterling and Fuel
- UK Car Industry Jobs
- UK Haulage Industry and Fuel Duty
- EU Referendum Effects on UK Drivers – Quentin Willson’s Perspective for FairFuelUK
Fellow FairFuelUK Campaign founder Howard and I are being repeatedly asked what does the EU Referendum mean for UK drivers? Should we leave or should we stay? A burning question this, but in the miasma of conflicting information currently out there, not an easy one to answer. Being non-partisan is one of FairFuelUK’s most important core values and our position must always be politically neutral. But as with the thousands who contact us each week, we have to admit that we both have EU-based concerns about fuel prices, VAT and the growing debate on diesel emissions. But as in every aspect of the EU debate when it comes to the 37 million drivers in the UK there are positives and negatives to both staying and leaving. I hope we’ve covered the most important for you to make an informed decision.
- FairFuelUK EU Survey
Once you have read these issues outlined in this blog, please take part in our survey at https://www.fairfueluk.com/forms/FFUK_EU_Poll/FFUK_EU_Poll.php.
We will collate the responses and tell our politicos and the media how the silent and highly taxed driving majority feel about leaving or remaining in the EU in advance of the referendum. Interestingly, in last year’s General Election FairFuelUK supporters predicted that result absolutely ‘spot on’ - something the professional pollsters at the time missed.
- EU Driver Benefits
do have to remember that the EU has provided a very solid raft of benefits to
UK drivers. Brussels has brought us:
- Higher car safety standards
- Saved lives
- Lowered car prices
- Given us a more transparent servicing market
- Forced more accountability from big car-makers.
- New Car Prices
I worked with the EU during the 90s campaign for parity on new car prices between the UK and mainland Europe. Those of a certain age will remember the days when a Rover 200 cost £5,000 more here than in Holland. This was a totally insane situation that I regularly highlighted on TV and in print and one that with pressure from EU Block Exemption laws we were able to change.
We now have some of the cheapest new cars in Europe and a reasonably transparent car market. The savings to UK consumers from this stellar piece of European Commission legislation genuinely add up to billions of pounds. This is one of the EU’s most-celebrated motoring-related achievements.
We don’t think leaving the EU would change new car price control as consumer pressure is much more strident than it was in the 90s but having the EU watching over car maker pricing policies is always a good thing.
- Car Servicing
The Treaty of Rome broke the manufacturer strangle hold on main dealer servicing to keep consumer warranties valid. Previously carmakers insisted customers maintained their cars at franchised dealers for the warranty to stay in force. The EU mandated that consumers could take their cars to other qualified repairers without voiding their warranty cover. Manufacturers were also ordered to share their technical information, special tool specs and computer software with non-franchised repairers and that the supply of spare parts couldn’t be deliberately restricted solely to approved dealer groups.
Add all this cartel-busting legislation up and the EU has helped UK drivers not only save money but made running their cars much easier and more convenient. Tons of money saved there and that level of powerful consumer protection is very desirable.
- Car Safety
Max Mosley (who, incidentally, is a very fine bloke) worked very closely with the EU on the game-changing 1997 Euro NCAP crash safety standards. EU legislation mandated tough new crash impact laws for all passenger cars sold in Europe. He once told me that one major carmaker - which shall have to remain nameless - threatened to pull their sponsorship from Formula 1 if the low crash ratings for one particular model weren’t changed. Max, because he had the might of the EU behind him, was able to politely, but very firmly, show them the door.
Ongoing safety legislation is making European cars safer every day and saving thousands of lives every decade. And without cross-border EU pressure on all the big car manufacturers these massive strides in occupant and pedestrian safety just wouldn’t have happened. Some of us remember the Ford Pinto and Chevrolet Corvair…
I’d like to say that the EU’s considerable work on reducing vehicle emissions has been similarly successful. Billions of Euros must have been spent since the early 80s reducing CO2 and other pollutants. Hugely laudable, very well intentioned and a subject of contention for all the big car companies (who lobbied aggressively to continually water the standards down) we’re now seeing that the EU focus on climate change and CO2 partly underestimated the effects of diesel emissions like PM10s and NOx.
I believe the global warming argument took precedence over soot and particulate matter from diesels and good scientific advice was ignored for political reasons. In the late 90s governments all over Europe scrambled to reduce CO2 emissions from cars, vans and trucks and ignored the much more pressing health hazard of diesel emissions.
Gordon Brown in 2001, on the advice of the EU, lowered the duty on diesel because it was considered a greener fuel than petrol. 50% of UK consumers swapped over to oil burning cars and that single policy decision drastically changed the quality of the UK’s air in a single decade.
We still don’t know how serious a health problem this is or begun to deal with it properly (there’s still no robust particulate matter test in the MoT) and the long-term cost to the NHS could run into billions, if not trillions. The short-term bill to diesel owners may be hefty too as we’re likely to see an increase in duty on diesel vehicles, maybe higher rates of VED, chargeable low-emission zones and even falling secondhand values. The UK has too many old dirty, poorly maintained diesel cars, vans, buses and trucks, a testing regime for new diesel vehicles that we know is wildly inaccurate and no way of measuring just how bad our diesel air crisis actually is. That’s won’t come until we get new EU Real Driving Emission standards in 2020.
Amazingly EU lawmakers in February waved through plans to allow diesel car makers to exceed pollution limits, in a big victory for the auto industry lobby after the Volkswagen scandal. The European Commission, the executive arm of the EU's 28 member states, announced the new limits in October as the VW scandal raged, part of plans to adopt more realistic pollution monitoring based on real road conditions instead of laboratory tests. But the proposals contained major loopholes for car-makers that were negotiated secretly by experts from member states, angering environmentalists and ordinary drivers who reacted with a major push to block the new limits at the European Parliament. MEPs voted 323 in favour of leaving the loopholes -- known as "conformity factors" -- with 317 MEPS voting against them. There were 60 abstentions.
Under the commission's plan, from September 2017 new diesel models would be allowed to exceed the EU's official nitrogen oxide limit by more than double. From 2020, the discrepancy would fall to 50 percent more than the limit, indefinitely. Legal experts at the European Parliament had argued ahead of the vote that the allowances were illegal.
And this apocalyptic air quality disaster has unraveled because Brussels got too obsessed with climate change. Critically Brussel will want to unpick all this and bring in new standards to deal with particulate emissions and there are already suggestions for random roadside checks on cars and diesel-free zones in some towns and cities.
Leaving the EU would allow us the freedom to decide how and when we sort out the diesel emissions crisis in the UK ourselves.
Could our roads be better maintained if we left the EU? Brussels may not have anything to do with actually surfacing our tarmac but the £13 billion net we paid to the EU last year would definitely help fill some deep holes. Since 1973 we’ve paid the EU £380 billion in total, which could have built more roads, railways and generally polished up our public transport system a lot.
Arguing that it’s the EU’s fault we have rubbish roads doesn’t wash though. Over the years successive UK governments haven’t invested enough in the transport infrastructure. But I can’t help wondering why France, Spain, Germany and even Portugal have. Were there some subsidies we missed or did we actually fork out for some of their roads? We may never know. But even if we didn’t hand over that £13 billion net last year would our government spend a bit of it on improving UK tarmac? There’s no certainty of that either.
In bald figures the UK’s EU budget contribution is twenty-three times the size of the entire English Highway’s maintenance budget for 2016-2017. And drivers should certainly ask Westminster if some of the £12 billion Foreign Aid Budget and £5.8 billion International Climate Fund could be better spent nearer home. But that’s not exactly the EU’s fault.
- VAT on Fuel
VAT on fuel definitely is a Brussels issue and one that does cost UK drivers several billion every year. Howard and I have always been against the double taxation element on fuel – duty on the fuel and then VAT on the duty. The EU 2006 VAT Directive prevents us having a lower VAT duty on petrol and diesel. In fact in 2011, Justine Greening, then Economic Secretary to the Treasury, said that renegotiating EU VAT rules could take as long as six years.
So changing VAT on fuel while in the EU would be as easy as learning three oriental languages, which is why FairFuelUK have never pushed our case more forcibly. UK drivers pay £28 billion in fuel duty to HMRC and driven by the EU £4.5 billion in VAT questionably on the duty itself. Total VAT on fuel purchases at the pumps is a huge £7.1 billion. If we weren’t in the EU that VAT bill could reduce but only if the Treasury agreed. We’d certainly have the freedom to reduce it but would also need the political will from our government.
- Sterling and Fuel
There’s been some doom talked about the collapse of the Pound if we leave the EU and that it could increase the cost of oil (measured in Dollars) and prices at the pump. The AA has taken the most pessimistic view suggesting that the Pound could fall as much as 20% within days of Brexit causing fuel to soar by 18p a litre. FairFuelUK is on record saying we don’t think that’s a likely scenario at all and based on very questionable worst-case scenario assumptions.
Currency speculators do like uncertainty so Sterling could be moved down initially but most economists don’t think any falls would be either long-standing or that precipitous. There’s also a global supply glut of oil, which won’t go away anytime soon so the argument that Brexit could significantly influence oil prices upwards is moonshine. Leaving the EU would allow us to change our VAT rates on fuel so if there was a fall in Sterling we could protect pump prices by reducing the tax element. Leaving the EU could actually make petrol and diesel less expensive, not more.
The EU Renewable Fuels Directive has mandated that road fuels should have a 5% bioethanol content (rising to 10% by 2020) to reduce greenhouse gas emissions. Fuels in the UK currently have as much as 4.7% bioethanol mix. The theory is the plants grown to make the biofuel absorb CO2 from the atmosphere therefore become a renewable fuel source that reduces carbon. Trouble is their production impacts the food chain, takes up land, requires the use of carbon emitting machinery and the production of fertilisers, so the actual reduction of CO2 isn’t as great as originally thought. Chatham House claims that the cost of having biofuels at the pumps currently costs UK motorists an extra £460 million every year due to the higher refining costs and slightly lower fuel economy. At a 10% mix the cost to UK drivers by 2020 could rise to £1.3 billion. The jury is definitely out on the environmental benefits of biofuels but we reckon they’re not worth the extra expense and the UK should decide on the content of our road fuels and not the EU.
- UK Car Industry Jobs
What about car prices and car industry jobs? Will those much talked of tariffs increase the costs of cars imported into the UK and make our exports more expensive and uncompetitive? I don’t think so. The UK is the German car industry’s biggest market so if they raised the tariffs on all our Land Rovers, Jaguars, Minis, Nissans and Toyotas then we’d do the same to their Mercedes, BMWs, VWs and Audis. Nobody would benefit at all. I think if we left the EU things would carry on pretty much the same and prices of new cars to UK consumers wouldn’t change.
Would EU car companies with factories in the UK move them elsewhere? Certainly not to the low-growth Eurozone countries where labour rates are higher, labour laws tougher, unions more powerful and productivity lower. The UK is a centre of car excellence and moving a car plant to say, Greece, Spain or France, wouldn’t make much commercial sense, never mind the astronomic cost.
- UK Haulage Industry and Fuel Duty
Since 2011 FairFuelUK has been hugely successful in preventing those planned fuel duty hikes. We would be paying nearly 20 pence more at the pumps for each litre of fuel if it were not for FairFuelUK’s endeavors. The campaign’s success has largely been due to the huge groundswell of practical support of sensible thinking supporters plus in no small way from the backing of the Road Haulage and Freight Transport Associations and more recently from the Association of Pallet Networks.
In a 2015 survey held by Microlise the results found that 89% of road transport workers think that the government does not show enough understanding of the UK road economy and that 87% want HS2 rail project money diverted to road improvements. The findings of this report also show a picture of an industry which is being impacted on a number of fronts, including the driver shortage, the current Calais crisis and the highest fuel duty in Europe.
In FairFuelUK’s 2016 pre-Budget poll, paradoxically as with all UK based industry, depending on the size of the company there seems to be a direct correlation related to voting intention. The larger the company the more likely it favours remaining in the EU, whereas road transport SMEs and white van small business owner/operators overwhelmingly would prefer to leave.
So who is right? For years the UK Haulage Industry hasn’t been able to contend fairly with its EU based competitors. All European Union States without exception have lower duty on diesel than petrol. Greece subsidises diesel with a lower tax element making it as much as 30p per litre less than petrol.
HGV’s from the continent with huge fuel tanks travel across the UK without the need to fill up with our considerably more expensive diesel. As the UK is a full member of the EU, why has Brussels not legislated for fairer fuel taxation parity across all countries? George Osborne remains in control of what tax we pay on fuel so the EU cannot be solely blamed. BUT with £350m each week going to Brussels this equates to a 1p cut in duty. A month’s worth of EU Membership contributions would allow a 4p per litre cut in our fuel costs with at least £16bn to invest in the NHS, road repairs and improvements to public transport. Leaving the EU would mean the Government could invest budget savings in transport and improved distribution - but only if Westminster was willing.
I hope we’ve covered some of the important areas and we should also repeat that the EU has definitely made our cars safer, easier to service and cheaper to buy. But we believe there are gathering storm clouds over emissions, important issues over our haulage industry, fuel taxation plus the higher cost of petrol and diesel across the EU compared to other countries. FairFuelUK would definitely support some of our yearly payments to the EU being spent on hospitals, public transport, infrastructure, job creation and road improvements. But most important we believe that the future of road transport in the UK should be decided by us, and not by Brussels. On that point, we’re absolutely certain. Settling the rest of the arguments about business tariffs, sovereignty, immigration, justice and border controls we’re going to have to leave to you.