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FSB London response to proposals to expand the ULEZ boundary beyond central London (Stage 3b)

26 February 2018

Introduction

The Federation of Small Businesses (FSB) is the UK’s leading business organisation. It exists to protect and promote the interests of the self-employed and all those who run their own business. The FSB is non-party political and is also the largest organisation representing small and micro sized businesses in the UK.

Small businesses make up 99.2 per cent of all businesses in London, and make a huge contribution to the UK economy. They contribute 44 per cent of London’s GDP and employ 39 per cent of the workforce[1]

Small and micro businesses – whether long-established or just starting out – are a vital part of the London scene. Not just as drivers for growth, but as the glue that holds communities together. This is as relevant in central London as it is in the outer Boroughs.

However, London’s small and micro businesses have been badly affected by spiralling costs that include increasing property costs and taxes, employment costs and increasingly challenging logistics for supplying and servicing their business. All of these and more, squeeze already-stretched margins and diminish the ability of small businesses to invest, grow and create employment.

Stage 3b: (30 November 2017 – 28 February 2018) A statutory consultation on the proposal to expand the ULEZ boundary beyond central London.

Consultation questionnaire responses:

Q1) Do you support tougher vehicle emissions standards in the London-wide Low Emission Zone so that heavy vehicles must meet Euro 6 London-wide?

Implementing tougher vehicle emissions standards for heavy vehicles London-wide will affect very many small and micro businesses and for this reason we do not support this proposal.

As the costs of doing business in the capital are increasing at rates above inflation, the proposals to introduce tougher London-wide LEZ standards will disproportionately impact on many small and micro businesses, who service the outer boroughs where orbital interconnectivity is more reliant on road transport than at the centre.

We have several members who are independent freight operators who are already finding it increasingly hard to compete with the large freight companies. Further squeezes of their margins (freight margins are typically as low as 3 per cent) may mean the end of those businesses, resulting in a less competitive sector and less choice for the consumers in that market, as well as increased unemployment.

Given the current plans to build significantly more affordable houses in the capital, there will be a necessary requirement for more building materials to be brought into London. Extending the LEZ standards London-wide for heavy vehicles will add additional costs on to the overall project and may result in suppliers using smaller vehicles to avoid these costs, adding to congestions levels, and undermining the Mayor’s aim of improving air pollution in London.

The contribution of SMEs to London’s economy and local communities should not be underestimated as they provide social value, community cohesion and create jobs faster and in larger numbers than any other kind of organisation can, across every sector. Our research shows that people starting up a small business or becoming an employee of an SME account for 88 per cent of all movements from unemployment into private-sector employment.  [http://www.fsb.org.uk/policy/assets/publications/fsb_2012_back_%20to_work.pdf]

FSB believes that the time has come for a grown-up debate on whether the current charging mechanisms, and future mechanisms, will do more harm than good to London’s competitiveness. Because they are the very fabric of our communities, helping small businesses will help London.

We urge the Mayor and TfL to undertake a ‘root and branch’ reform of the full charging system to reduce the impact on small and micro businesses operating in London and offer policies that work with, not against, small business.

Q2) Do you support the proposed implementation date of 26 October 2020 for the introduction of tougher Euro 6 standards for heavy vehicles driving in the London-wide Low Emission Zone?

We do not support the proposed implementation date of 26 October 2020 for the introduction of tougher Euro 6 standards for heavy vehicles driving in the London-wide LEZ as we do not feel this allows sufficient time for vehicles owners to upgrade their business vehicles.

Small and micro businesses rely on longer vehicle ownership cycles than large businesses. They also more usually opt for second-hand vehicles, using residual asset values to obtain their next vehicle.

Many are constrained by vehicle lease agreements that will continue beyond 26 October 2020 meaning they will have to pay lease agreement repayments as well as fines for non-compliance, simply for operating their business in London.

Allowing 30 months to upgrade their heavy vehicles is simply not enough time for small and micro businesses who do not have the same buying power as larger businesses and subsequently will end up with higher acquisition costs.

Alternatively, offering a tapering, reduced charge to early adopters ahead of 2020 would encourage change and provide a ‘carrot and stick’ approach, rather than immediately opting for full charges and penalties.

Q3) Do you support the proposed daily charges to be paid by owners of heavy vehicles that do not meet the required emissions standards at: £300 for those that do not meet Euro IV PM standards and; £100 for those that do not meet Euro VI NOx and PM standards?

FSB is not supportive of any additional charge burden for small and micro businesses operating in the capital.

Any additional charge to a small and micro business operating in London is unwelcome at a time of shockingly high operational costs. The average small business in London will already be facing rising property costs (including rent and business rates); increased costs of goods to sell from their business, especially for those who rely on imports; increasing employment costs (for example regulatory increases to wages and auto-enrolment pension contributions); increased transport costs (including increased congestion charges, T-charges, fuel costs, rising cost of business parking permits),  and countless other operational costs that rarely, if ever, decrease.

We urge the Mayor to press much harder for a diesel vehicle scrappage scheme to help small and micro businesses make the transition to lower emission vehicles without enduring a disproportionately high cost if these proposals are introduced as proposed.

Q4) Do you support the principle of expanding the area where ULEZ emissions standards apply to light vehicles beyond central London?

Small and micro businesses are significant users of light vehicles for carrying out their business operations supplying and servicing London.

Extending the ULEZ for light vehicles London-wide will cause considerable financial hardship for many small businesses.

Many rely on on-street parking and often employees take their vehicles home to areas outside central London, at the end of shifts, where they also use on-street parking.

Making the change to electric vehicles to reduce vehicles emissions is therefore problematic as off-road parking is limited and the infrastructure for on-street public charging points is still developing.

Expanding the ULEZ for light vehicles beyond central London should not be implemented until suitable infrastructure and practical, accessible and affordable alternatives that support SMEs are in place.

Q5) We are proposing that the ULEZ emissions standards would apply to the inner London area, roughly up to but not including the North and South Circular roads. Do you support this proposed boundary?

Whilst our members remain supportive of proposals to improve air quality across London, the costs of extending the ULEZ scheme more widely across London up to the North and South Circular roads, will disproportionately fall on the smallest operators within the business community.

We would not wish to see the North and South Circular roads included in the extended area as this would add time and costs to the journeys of small and micro operators in finding alternative routes to avoid the penalties – thus reducing their profitability and productivity significantly.

Q6) Do you support the proposed implementation date of 25 October 2021 for the expansion of ULEZ to include light vehicles in inner London?

We do not support the proposed implementation date of 25 October 2021 for the expansion of the ULEZ to include light vehicles. Whilst this provides over three years to upgrade vehicles, we do not feel this allows sufficient time for vehicles owners to upgrade their business vehicles at a time of economic uncertainty and rising operational costs for small and micro businesses.

Owners of non-compliant vehicles will find that their residual asset value has decreased more than anticipated, the cost of compliant vehicles will be higher than expected and some may be contractually bound by leases that run beyond 25 October 2021.

Alternatively, offering a tapering, reduced charge to early adopters ahead of 2021 would encourage change and provide a ‘carrot and stick’ approach, rather than immediately opting for full charges and penalties.

If the challenges of SMEs are not understood and addressed with the implementation of these measures, we fear that many SMEs will either go under or move away from London, with resultant job and amenity losses for communities and local economies.

Q7) Do you support the proposed ULEZ daily charge to be paid by non-compliant owners of light vehicles of £12.50?

FSB is not supportive of any additional charge burden for small and micro businesses operating in the capital.

Any additional charge to a small and micro business operating in London is unwelcome at a time of shockingly high operational costs. The average small business in London will already be facing rising property costs (including rent and business rates); increased costs of goods to sell from their business, especially for those who rely on imports; increasing employment costs (for example regulatory increases to wages and auto-enrolment pension contributions); increased transport costs including increased congestion charges, T-charges, fuel costs, rising cost of business parking permits,  and countless other operational costs that rarely, if ever, decrease.

We urge the Mayor to press much harder for a diesel vehicle scrappage scheme to help small and micro businesses make the transition to lower emission vehicles with enduring a disproportionately high cost if these proposals are introduced as proposed.

Q8) Do you support bringing forward the end of the sunset period for residents in the Central London congestion charging zone from 7 April 2022 to 24 October 2021 so that all residents of inner London, including the Congestion Charging zone, pay the daily charge for non compliant vehicles from 25 October 2021?

No commment.

Q9) Do you support increasing the penalty charge (PCN) level for non-payment of the ULEZ daily charge by owners of non-compliant light vehicles from £130 to £160?

The increase of £130 to £160 might not seem a significant increase, however, London is the costliest place to do business with recent FSB data showing that small firms in the capital are now paying 30% of their turnover on Rents and rates – compared to 20% when asked 12 months earlier. 

Small and micro businesses can ill afford extra costs on their business, so we call for a light touch approach to targeting small and micro businesses who can demonstrate they have fallen foul of the regulations inadvertently. This is especially true for small and micro operators who travel into the capital infrequently.

Contact:

Denise Beedell, Development Manager - London
Denise.beedell@fsb.org.uk
07595 284 327

Federation of Small Businesses
2 Catherine Place
Westminster
London
SW1E 6HF