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Congestion charge plan prompts dealer cost warning

Government plans to replace the existing road tax system with a variable road charging scheme could greatly increase dealer costs.

The Retail Motor Industry Confederation issued the warning after the Government revealed plans to scrap road tax and fuel duty in favour of a ‘pence per mile’ road charging scheme.

Unveiling plans for the next 10 years in a Transport White Paper, Transport Secretary Alistair Darling announced the launch of local road toll schemes where drivers pay by the mile. They could be in place by 2014.

But Matthew Carrington, RMI chief executive, says: "Darling’s scheme to reduce road congestion could inadvertently damage the retail motor sector and its service to customers.

"This would affect dealers of all sizes. Those with more than one site could face charges if they moved vehicles between branches. The only alternative would be to move vehicles via transporter, which would be even more expensive.

"Also, any dealer that allows a customer to take a test drive would have to pay.

"Courtesy car use by customers would need to be monitored, or possibly abandoned entirely. At present there is no restriction on mileage for customers using courtesy cars. But under a road charging scheme, dealers would need to establish a method to make their customers pay for any charges incurred. Given the opportunity for conflict with customers that this could cause, many dealers might feel it would be simpler to no longer offer this service."

The most radical of the Government’s vision for road pricing would see a satellite tracking-based system, with drivers charged variable rates per mile depending on how busy the route they used was.

A study into the scheme – written by transport experts and Government officials - found that the greatest benefits would be gained from a scale of charges starting at 2p a mile and rising to a top rate of £1.30 a mile.

The Department for Transport has suggested that it could cost as much as £3 billion a year to implement the satellite tracking scheme, with essential on-board vehicle technology representing the biggest cost. While existing satellite navigation systems can pinpoint the location of a vehicle, significant investment will be necessary to develop a 'box' that can also measure other factors such as time and distance travelled.

Revealing the results of a feasibility scheme, Darling said 'a lot of work' would have to be done before such a scheme could be established nationally, perhaps taking 10-15 years, although local schemes would be possible.

Darling said: "Moving to a national scheme would be fraught with difficulties. Introducing this scheme would be instead of the present taxation system.

"What we are not talking about is piling one tax on another."

Darling stressed the consequences of ignoring the road pricing option would be "irresponsible and would condemn future generations to endless delays and increasing environmental damage".

His five to 10-year plan assumes traffic jams could be 40% worse in the next two decades.

Edmund King, executive director of the RAC Foundation, criticised the lack of detail in the White Paper. He says: "We need to see firm plans, timetables and targeted expenditure to facilitate much needed improvements to the road infrastructure over the next couple of decades.

"Road pricing is not a substitute for road improvements. Road pricing should be part of a package but much of the package seems to be missing.

"Motorists are becoming increasingly frustrated by the growing congestion on our roads, and the economy is suffering as a result, with congestion costing the country at least £15 billion a year.

"As a result the RAC Foundation has identified a list of urgently needed improvements to the strategic road network, which at a cost of around £2bn a year over 10 years could all be paid for out of one year’s motoring taxation.”

SMMT chief executive Christopher Macgowan, said, "Road charging may well have a role in managing demand on the UK's congested road network but it must not lead to an increase in tax take from the motorist.

"The objective for the motor industry and Government alike must be a modern and efficient transport system that supports vehicle production, aids economic growth and respects the environment. This requires sustained levels of new government investment in the short and medium term based on targets that are clearly set and reviewed regularly."

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