Horizon Scanning: Changes affecting the London Emission Zones

Published 11 mayo 2018

Introduction

In June 2017, we flagged upcoming changes to the London emission zones, looking back at how the introduction of the London-wide Low Emission Zone (LEZ) in January 2012 caused a spike in exaggerated damage claims for commercial vehicles in Greater London.

We are now releasing this alert to draw your attention to further changes to the London emission zone standards, which may have an impact on fraud claims.

Changes affecting the London Emission Zones

The LEZ currently in operation in London affects heavy vehicles. At present, the LEZ requires all heavy vehicles to meet a Euro IV Particulate Matter (PM) standard or pay a daily charge of £200 and all vans and minibuses to meet a Euro 3 PM standard or pay a daily charge of £100.

In addition to this, a "T-Charge", or toxicity charge, has been operational in the central London Congestion Charging Zone since 23 October 2017, between Monday & Friday 07:00-18:00. This will be replaced by an Ultra-Low Emission Zone (ULEZ) from 8 April 2019. The ULEZ will apply 24 hours a day, every day of the year. All vehicles that do not meet emission standards will be liable to pay a daily charge to drive within the zone.

On 28 February 2018, Transport for London closed their consultation on proposed changes to the Ultra-Low Emission Zone (ULEZ) and Low Emission Zone (LEZ).

New proposals have been put forward to:

• Tighten the emission standards of the existing London-wide LEZ from 26 October 2020, which affects heavy vehicles – buses, coaches and HGVs and other heavy specialist vehicles.
• Expand the ULEZ for light vehicles (cars, vans and motorcycles) from central London to inner London up to, but not including the North and South Circular roads in 2021, so that all vehicles in this area are subject to emissions standards.

A decision on the new proposals is expected to be published shortly.

Summary of main changes:

• From 8 April 2019 (confirmed):
  • Motorcycles will have to meet a Euro 3 minimum emission standard in the ULEZ or incur a daily charge of £12.50 (motorcycles previously did not incur a charge).
  • Standards for diesel cars/ vans/ minibuses in the ULEZ will be tightened to meet Euro 6 diesel standard or incur a daily charge of £12.50.
  • Heavy vehicles such as buses or trucks will have to meet Euro VI standard in the ULEZ or incur a charge of £100 (currently they only have to meet Euro IV standard or pay £10).
  • All of the above will be applicable 24 hours a day all year round and no longer just during Monday to Friday business hours.
• From 26 October 2020 (proposed):
  • Euro VI standard applies London wide in the LEZ for heavy vehicles including buses, coaches and lorries (not just in the ULEZ).
  • The daily charge for not meeting Euro IV PM for heavy vehicles is to be increased from £200 to £300 for the wider LEZ (though there will no longer be an additional charge for the ULEZ, therefore those heavy vehicles driving in the ULEZ will not see a difference in the charge).
• From 25 October 2021 (proposed):

All standards and charges from previous years remain the same and remain applicable for vans, trucks and buses for the entire LEZ. However, the ULEZ is proposed to be expanded, thereby affecting a larger number of lighter vehicles, e.g. vans/ minibuses and cars that do not meet Euro 4 petrol or Euro 6 diesel standard or motorcycles that do not meet Euro 3 standard.

The proposed changes to the LEZ would mean that all vehicles are subject to emissions standards in the inner London area shown on the map below:

The proposals include a grace period for Congestion Charging Zone residents’ vehicles that do not meet the ULEZ emission standards until 25 October 2021. This grace period would NOT apply to residents living in the ULEZ, up to the North and South Circular roads.

Penalty charges for non-payment of LEZ and ULEZ charges are proposed to be increased.

Discounts and exemptions will apply to:

• London licensed taxis (up to 15 years old). Please note that no discounts apply to private hire vehicles.
• Vehicles that have a 'disabled' or 'disabled passenger vehicles' tax class and are exempt from vehicle tax, except those operated by or on behalf of Transport for London (exempt from ULEZ until 10 September 2023).
• All vehicles that have a 'historic' vehicle tax class or are registered prior to 1 January 1973.
• Specialist vehicles which are currently exempt from the LEZ - these include agricultural and military vehicles, non-road going vehicles which are allowed to drive on the highway (for example, excavators), and certain types of mobile cranes.
• Some custom-built travelling showman's vehicles.

What does this mean for motor claims?

The planned/ proposed changes will affect particularly certain types of motorcycles, light diesel vehicles (such as cars, vans and minibuses) and heavy vehicles. It is anticipated that most of the lighter vehicles registered after 2006 or 2007 will be compliant (e.g. motorcycles, cars or vans). However, the introduction of the tighter Euro 6 (diesel) and Euro VI standards will mean that cars, vans and minibuses with diesel engines, as well as HGVs, buses and coaches registered before 2014 or 2015 are likely to be non-compliant.

Just looking at HGVs alone from the above listed risk groups, calculations based on official data from the Department for Transport (DfT) would suggest that an estimated 18,693 HGVs registered in Greater London could be non-compliant*.

As previously highlighted in our Fraud Identification conference last year, and following the introduction of the LEZ in 2012, we saw a spike in the proportion of van claims referred to our counter fraud team for the affected areas, especially in relation to suspected exaggerated claims.

There is the potential for similar spikes in claims for affected vehicles around April 2019, October 2020 and October 2021 (should the proposals be accepted) – both third party claims and first party claims for stolen or written off vehicles in the approach to and immediately after the cut-off dates.

As a consequence, we recommend that the affected postcode areas, in combination with vehicle types, are flagged in your fraud detection systems in the run up to the implementation of the ULEZ in April 2019. Should the proposed changes to the ULEZ boundaries be implemented, these parameters should be widened to cover the new area before the new boundaries are implemented in 2021.

If you wish to discuss our predictive analysis and Dynamic Fraud Indicator products with us, please contact us on the details below.

*According to DfT data, there were 20,100 licensed HGVs in London at the end of 2017. At that time, 93% of HGVs UK wide would have been registered before 2014 and would hence be affected once the new standards come in. Applying this percentage to the London figure (i.e. 93% of 20,100, as no London percentage is available), and assuming the figures stay roughly the same up to the point when the new standards come in, this would mean that an estimated 18,693 HGVs may not meet the required standards.