Industry relief at Budget fuel duty freeze

The transport industry has responded with relief to the news that the fuel duty increase scheduled for September has been cancelled in this week’s Budget.

Mark Fletcher, finance director of parcel delivery specialist APC Overnight, said: “The cancellation of fuel duty rises, announced as part of today’s budget, shows a strong commitment from the chancellor to keeping Britain’s businesses running. Delivery company margins have been under pressure for a number of years, largely due to rising fuel costs and this will be a boost to the industry.

“Operating costs are a key concern for many businesses at the moment and increasing prices to accommodate further cost rises is often not an option under the current economic climate. Today’s announcement will have a significant impact on all businesses operating within the transport and logistics sectors, by allowing them to maintain pricing structures.”

But there remains dissatisfaction that chancellor George Osborne did not go further and make cuts to fuel duty. In a statement, the Freight Transport Association (FTA), which had argued for a 3 pence per litre reduction in duty, called the decision “a missed opportunity”.

Commented James Hookham, FTA managing director of policy and communications: “While we are relieved that the immediate danger has passed, in order to get the UK back on the road to economic recovery it is vital that we have a cut in fuel duty and a long-term strategy to prevent future rises and uncertainty.

“The Chancellor has once again squandered an opportunity to support UK industry, jobs and economic recovery, by failing to reduce fuel duty rates.”

While FTA acknowledged that duty rates relative to diesel for natural gas and biomethane have been fixed for a further year, it said: “However, the payback period for gas-powered trucks is at least 10 years and the fragility of the business case for these vehicles is such that uncertainty over even small increases in gas duty rates renders these investments uneconomic.”

Hookham added: “The Chancellor has bought some time for discussions with the industry. However, there must be a long term fix in gas fuel duty rates to provide the certainty needed to stimulate investment in low-carbon fuelled vehicles to the benefit of businesses and the environment.”

Campaign body FairFuelUK agreed that the Budget measures did not go far enough. Spokesman Quentin Willson, while welcoming the freeze, added that there would be: “widespread disappointment that the cancellation of this duty rise gives… no immediate relief from climbing fuel prices. Cancelling a rise that really shouldn’t happen is not enough. The government needs to cut duty substantially to get the economic growth we all need.”