London’s emissions-related charges could backfire on small firms, warns FPB

The FPB welcomes moves to tackle climate change and reduce London's CO2 emissions, but believes that more could be done to help small businesses to adjust. Bigger businesses can easily absorb the additional costs incurred on vehicles over 3.5 tonnes which do not meet the emissions targets, but smaller firms will be left struggling.

Last year, the FPB wrote to the Mayor of London, Ken Livingstone, outlining the concerns shared by many small businesses located in London. Matt Goodman, the FPB's Policy Representative, said that evidence suggested the charges might not cut vehicle pollution.

"Tackling pollution from vehicle emissions has to be a priority, but an independent review carried out by the Centre for Economic and Business Research Ltd (CEBR) found that emissions charges are likely to lead to increased traffic and worse congestion," he said. "Taken with the burden of additional costs, this move could have a disastrous impact on many smaller businesses."

Small hauliers, in particular, could be forced to increase their prices in line with rising costs, such as investing in more environmentally-friendly vehicles. This could give businesses in other regions which are not affected by the charges, and bigger competitors located within the low-emissions zone, a competitive advantage. The FPB believes that the increased costs will also be passed onto customers – including the price they pay for supplies and deliveries.

The Road Haulage Association (RHA) has estimated that nearly 20,000 goods vehicles will be affected by emission charges. It said a 28-day warning period, which was introduced by Transport for London (TfL) to help hauliers comply, could be too short.

"There is no guarantee that 28 days will be long enough to clear the supply backlog and install the new equipment," said the RHA's Chief Executive, Roger King. "We will be monitoring the situation carefully and will approach TfL for a further extension, if necessary."

Many small firms are already suffering because of the existing congestion charge policy. In 2006, a snapshot survey of the FPB's London-based members revealed that 90% of respondents believed it was harming their businesses. The majority reported a drop in profits as a result of the introduction of the charge.

Bespoke shoemaker, James Taylor and Son, is located on the edge of the existing congestion charging zone in London. Its Managing Director, Peter Schweiger, has experienced both the positive and negative effects.

"I can sit with the shop door open during the summer and still hear my customers speaking," he said. "However, as the number of cars passing by has decreased as a result of the charge, we have had a reduced number of customers. The number of people coming here to have their shoes specially made to measure has not gone down, but there are certainly fewer coming in to have their shoes repaired."