Set financial standing rates in pounds not euros after Brexit, says FTA

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The Freight Transport Association (FTA) has said that the UK should be setting its own rate, or even completely reviewing the financial standing system against which operators are deemed to be operationally viable, after Brexit on March 29, 2019.

The requirements for financial standing seek to ensure that O-licence holders have sufficient funds to work in the logistics and passenger transport sectors, and have sufficient reserves to prevent cuts in vehicle maintenance to make cost savings. For standard O-licence holders, European law currently requires bank reserves of €9,000 for the first vehicle and €5,000 for each subsequent vehicle. For EU countries which do not use the euro, the rate is reassessed against the exchange rate of the local currency every October, which can create fluctuations year to year.

James Firth, FTA’s Head of Licensing Policy, said: “Transition period or not, it would be absurd if the domestic UK road transport industry continued to be pegged to a financial standing rate in euros after Brexit.

“This means the UK needs to consult with industry, or select a level at which business is to be judged, to ensure that operators are able to plan efficiently and manage cash flows accordingly. Between 2012 and 2016, the actual figure required has fluctuated by almost £2,000 for the first vehicle, simply based on the changes in the exchange rate for euros – this situation needs urgent attention to ensure that stability for business expenditure can be established.

“At this point, the rate for restricted operators, set by the UK Government, not Brussels, has remained much lower than for traditional hauliers, while those operating in Eurozone countries have enjoyed a steady rate (€9,000 and €5,000) even through the depths of the Eurozone debt crisis.

“Shouldn’t the Government be taking this opportunity to reassess what financial standing is for, how it is determined in the 21st century and base it on values fixed in sterling? What are the greater financial risks to the hire and reward sector that the Government perceives justify continued rates so substantially elevated above those in the own account sector. The freight and logistics sector deserves a consistent operating environment in a post Brexit world.”