Joint Committee on Statutory Instruments Forty-Fourth Report


Memorandum from the Department of the Environment, Transport and the Regions

REGULATIONS 1998 (S.I. 1998/1671)

  1. At its meeting on 21 July the Committee requested a memorandum about this instrument on the following point:

    Given that the fees shown in the Table substituted by regulation 3 were last altered by the corresponding Regulations of 1997 (No. 82) as from 3 March 1997, explain why these Regulations increase them by 10 per cent.

  2. The testing of all heavy goods vehicles is undertaken by the Vehicle Inspectorate which is an Executive Agency of the Department of the Environment, Transport and the Regions. In 1991 the Inspectorate became a Trading Fund and fees from statutory testing schemes, of which the testing of heavy goods vehicles is one, were prescribed on the basis of gross costs.

  3. The need for a 10 per cent increase in the fees has been caused by a shortfall in the anticipated level of income for 1998/99. This shortfall is due to a combination of the following factors.

    (a) Statutory testing volumes did not reach the level of growth anticipated.

    (b) The initial cost of setting up the single vehicle approval scheme was not matched by fee income due to both a delay in implementing the scheme and a reduction in the number of vehicles subject to it.

    (c) Small demand-led statutory schemes and miscellaneous income did not meet planned levels.

    (d) Loss of rental income from the Driving Standards Agency.

  4. The Inspectorate considered several options but decided to adopt a twofold solution.

    (a) To increase fees so as to resolve the short term cash flow problem and provide for long term investment planning.

    (b) To get Treasury approval to a higher working capital limit thereby giving the Inspectorate a more robust base on which to manage sensitivities and the ability to avoid a repetition of the current situation.

  5. Two approaches were considered in relation to fee increases.

    (a) A 15 per cent rise in the fees for testing both heavy goods vehicles and public service vehicles.

    (b) A 10 per cent rise in those fees coupled with a fee increase on another scheme.

  6. The Inspectorate decided to follow the second approach. The benefit of the lower rate of increase is that it removes the potential need for a decrease in fees in a couple of years or so which would result from the achievement of further efficiency gains over time.

  7. The current 10 per cent increase should however be seen in a historical context because the fees have not been increased since 1992/93 and were in fact reduced by 5 per cent in January 1994 and by a further 3 per cent in March 1997. This is against annual GDP figures of between 1.51 per cent and 4.20 per cent over the same period. A straight addition of the annual GDP inflation and the fee reduction gives the equivalent of a 25 per cent decrease since 1992/93. The overall increase between 1994 and the present time is therefore less than the rate of inflation by 18 per cent.

27th July 1998

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