The HGV Road User Levy has been labelled an “abject failure” by the chairman of Baxter Freight, who said it has done nothing to address the cost imbalance between UK operators and their continental counterparts.

Responding to the recent update by transport minister Patrick McLoughlin that the levy had brought in £23.4m in its first six months – beating its annual revenue target by more than £3m – Ian Baxter said the amount raised is “tiny” in the context of government taxation.

“Obviously it has raised slightly more money than they thought,” he added. “Although some of that is about people buying annual upfront levies, which won't be the same in the second half of the year. But what was the cost of establishing this and what is the cost of administering it?”

He argued that there will always be an imbalance in costs between UK and other European hauliers because the market structure means twice as much freight enters Britain than leaves it. “That means that round trips naturally start on the Continent, with or without this taxation. Inbound freight rates are twice as much broadly as the outbound freight rates.

“So that means that a British haulier, with a British customer base, is not in a great position to start doing European transport, because he has to start with a loss-making outbound leg,” he insisted.

He added that foreign firms are also unlikely to want to compete with UK firms for domestic work, first because of cabotage restrictions, and second, because they find themselves with the opposite problem to British hauliers, and will experience difficulty securing a profitable outbound load.

“Their interest is to go straight back to where they come from and bring another well-paid inbound load back to the UK,” he said.