Eddington’s transport report puts UK economy at risk says FSB

Friday 1 December 2006

The Federation of Small Businesses (FSB) reacted to the Eddington Review with disappointment today. In a new survey of FSB members it was found that most businesses cannot change their travel patterns. Therefore, road charging will not reduce congestion but will simply increase business costs and harm the economy.

The UK’s largest business organisation reminded policy-makers that 4.3 million small firms employ over 12 million people in Britain. They contribute 50% of UK GDP. Restrictions on their growth through road charging would be likely to reduce the tax take to the Government and cancel out any gains raised through road tolls.

Businesses need to be able to get their goods and services to market easily, reliably and cheaply. A transport system that does not allow this severely restricts the economy.

Road taxes raise £45bn per year but only £7bn is spent on the roads. The FSB believes that more of this £45bn should be spent on the transport network. The proposal for road charging in order to gain extra revenue is seen in this light by small firms as nothing more than another tax.

However, the FSB did welcome Sir Rod’s backing for further airport expansion. A fifth of small firms told the FSB that aviation was important to them. Proposals to speed up the planning system for transport projects were also welcomed by small firms.

The FSB was also disappointed that a new North-South high speed rail line was not given priority status by Sir Rod.

Steve Collie, FSB National Transport Chairman, said:

“Any road charging measures must target non-essential journeys only. A blanket charge will simply be another tax on the already hard-pressed road user.

“Businesses need access to the road network at all times to service the needs of their customers. Tackling congestion would be welcome but charging them for this access would hit firms very hard - costing the Government more revenue in lost taxes than they would raise through road charging.

“A tradesman going to a customer’s house cannot take his tools and equipment on the bus. Therefore, the Government must recognise that essential business journeys on the roads would only be taxed at the expense of the UK economy.

“Business also needs an efficient and reliable public transport network so that staff can arrive at work on time. The average business loses nearly seven hours a week of staff time because of transport problems. That directly hits the UK economy and must be a Government priority for urgent action. More funding is needed for transport – but road taxes already provide it. Money raised from transport use should be spent on transport projects, not siphoned off to other areas of Government spending.”

Mr Collie referred to a new transport survey of the FSB’s membership – to be released in January 2007 - which found that:

• 90% of businesses experience congestion (40% experience constant congestion).
• 54% of businesses regularly avoid certain roads because of congestion.
• 77% of firms believe that there should be no extra charges for using busier roads and 72% did not agree with charging more to drive in peak times.
• In the area of the M6 toll road only 6% of businesses rarely get held up in traffic. Despite this only
• 43% of firms would consider using the M6 toll road – placing a question mark over road charging plans and their potential popularity.
• Small businesses could only accept road pricing if the scheme is revenue neutral for essential road users (i.e. other road taxes are reduced by the same amount as road pricing adds to their costs) and if the money raised is only spent on transport.
• 59% of businesses believe improvements to road access would lead to business growth.
• 22% of businesses believe that they would be more competitive with improved public transport provision. That rises to 35% in urban areas.
  

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