Fuel duty action could hand economy £3.6 billion lifeline

The Freight Transport Association (FTA) has called on the Chancellor to cut fuel duty by at least five pence per litre and scrap the increase planned for August.

James Hookham photo
James Hookham

The Freight Transport Association (FTA) has called on the Chancellor to cut fuel duty by at least five pence per litre and scrap the increase planned for August. In its pre-Budget submission to the Treasury, the leading trade body argues that such action could save consumers and businesses £3.6 billion and prove to be a vital shot in the arm for the UK’s ailing economy.

Following sustained and concerted lobbying by FTA and its partners in the Fair Fuel UK campaign, the last Budget saw two planned increases in fuel duty deferred and an unprecedented cut in fuel duty of 1ppl, a move which saved businesses some £500 million. However, despite this the price of diesel increased by 7ppl in 2011, adding £3284 to the annual operating cost of a typical 44 tonne articulated vehicle.

James Hookham, FTA’s MD of Policy and Communications, said: “Never mind quantitative easing, cutting the still-disproportionately high amount we spend on diesel, which is, after all, a business essential, would be a simple and effective way to stimulate the economy. The billions that industry and consumers will save over a year would be invested elsewhere in the economy, giving the impetus to growth that is so badly needed.

“George Osborne gave industry a lifeline in the last budget, but with the economy still in the doldrums and a new round of duty rises looming, we are asking the Chancellor to extend this logic further for the sake of businesses, consumers and UK plc.  It is clear that the economy still needs it.”

FTA’s Budget submission calls for tax on road fuel gases to be fixed relative to diesel rates for at least five years to provide confidence for truck operators and investors to commit to use of lower emission vehicles.

Hookham continued: “Logistics is helping to decarbonise the economy; members of FTA’s voluntary Logistics Carbon Reduction Scheme are on track to meet their self-imposed eight per cent greenhouse gas reduction target by 2015.  But much more could be achieved with greater government support. For example, biomethane from landfill sites could be a real option for articulated truck operators, but uncertainty over duty rates on natural gas and biomethane is a bar to investment in this sort of technology. We are simply asking government to help industry help the environment by fixing duty rates for the next five years.”

The uneven playing field between domestic and foreign hauliers could be addressed by introducing a time based lorry road user charge or UK Vignette, according to FTA’s Budget submission.

Hookham said: “It is only right that foreign lorries pay for their use of UK roads. But the industry’s support for a ‘UK vignette’ will be entirely contingent on how the Department for Transport can ensure that it does not impose additional costs on domestic hauliers; the only solution as far we can see is through a rebate on VED – the Chancellor needs to confirm this is what will happen in his Budget statement. Until a workable rebate mechanism is confirmed by government, I expect our members’ reception for a UK vignette will be only lukewarm.”

For more information: www.fta.co.uk


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