MHA | Concern over economic impact of Edinburgh’s new Low Emission…

Concern over economic impact of Edinburgh’s new Low Emission Zone

June 3rd 2024
Edinburgh skyline

Euan Fernie, Partner at MHA in the city’s St Colme Street, believes that while improving air quality is crucial to the environment and public health, business owners have valid concerns ahead of the scheme’s introduction on Saturday, June 1.

He said: 

“It’s undoubtedly a scheme that divides opinion. While few would argue with the need to improve air quality in our city centres, great consideration must be given to the potential economic impact the changes may bring.

“That could be for firms who service the city centre with heavy goods vehicles, taxis or vans, or for a feared drop in customer footfall for those whose cars do not meet the eligibility criteria.

“The LEZ is here to stay in Edinburgh and with all the tram and cycle lane works, it is perhaps surprising that it is not more radical in terms of its scale. No doubt this could follow in the years ahead.

“Improving the air quality in Edinburgh is a key aim as we have some of the worst in the country; partly caused by all the works done, slowing traffic down in the centre with traffic diversions and queues.

“There is a disproportionate impact on businesses that cannot afford less-polluting vehicles or alternative forms of transport. Government help is there but there are limitations to this in terms of business size and the type of vehicles.”

An LEZ is only accessible to vehicles that meet minimum emission standards. Typically, the zone will have an impact on diesel vehicles registered before September 2015 and petrol vehicles registered before 2006. Any vehicles breaching the emission standards will be issued a fine for entering the zone.

The Energy Savings Trust’s LEZ Retrofit Fund grants cover up to 70% of the cost of a vehicle retrofit for micro businesses or sole traders within a 20km radius of the LEZ, with limits applying.

These limits are:

  • Up to £5,000 per light commercial vehicle or wheelchair accessible taxi installing retrofit exhaust after-treatment systems
  • Up to £10,000 per wheelchair accessible taxi installing re-powering technology
  • Up to £16,000 per heavy goods vehicle or refuse collection vehicle

The businesses must:

  • Employ fewer than nine full-time equivalent employees
  • Have had a turnover of £632,000 or less, or a balance sheet of up to £316,000 in the preceding and current financial year
  • not be VAT-registered

Euan added that the health advantages of the scheme were clear. He said: 

“Looking at the potential benefits, restricting access for the most polluting vehicles to improve air quality helps protect public health within cities, making them more attractive places in which to live, work and to visit. It leads to increased use of public transport and active travel where people walk or cycle while also encouraging people to use more environmentally friendly vehicles.

“There is an argument that local authorities should be incentivising city centre use in the current economic climate, not adding more hurdles. The continued improvement of public transport and making city centre rates more affordable for businesses would contribute to this.

“The true picture of the economic impact of Scotland’s LEZ will become apparent in time but it’s clear businesses will need to be supported through the transition.”

Euan joined Edinburgh accountancy firm Geoghegans in 1999 and became partner six months later. Earlier this year, Geoghegans, merged with MHA, ranked the 13th largest accountancy group in the UK. MHA provides a full complement of accountancy services for clients in the capital and across Scotland, including audit and accounts, business and personal tax compliance and planning, and corporate finance. It has a diverse client base across various sectors, including financial services, engineering, property, construction, professional services, medical consultants and farms & estates.

Euan added: 

“There is also a valid concern over the impact on city centre footfall and a belief that the scheme unfairly impacts low-income and disabled people, students and those who drive for their job.

“There could be displacement of non-compliant vehicles into outlying areas. As well as increasing higher polluting vehicles in these areas, it could also encourage more shoppers to travel to out-of-town retail parks, and commuters to park further out to avoid not only the LEZ but also the ever-increasing cost of parking on the city centre.

“Public feedback from the Glasgow LEZ scheme introduced a year ago also highlighted issues of overparking outside the LEZ, a need to improve public transport and to establish better cycling routes and an environmentally friendly travel infrastructure.”

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