George Osborne has delivered his budget, and the reaction is starting to roll in.
The Road Haulage Association
The Road Haulage Association has welcomed the Chancellor’s decision to cancel fuel duty. But the fact remains that UK hauliers are still paying the highest levels of fuel duty in Europe.
“We urged a “no increase” announcement and the Chancellor delivered – although we would have liked him to go further by cutting diesel duty,” said RHA Chief Executive Geoff Dunning. “This is another massive achievement for the road haulage industry and the FairFuelUK campaign, which the RHA co-founded three years ago. We have transformed the debate around fuel taxes.
“The RHA also has a strong message for hauliers’ customers. Diesel prices have been rising sharply this year and, according to the RHA’s weekly fuel price survey, a key industry indicator, has already stands at 115.14ppl (ex VAT).
“Customers have to accept that their haulage charges must rise if they are to continue to receive the services upon which they depend,” Geoff Dunning concluded.
With the ‘cost of living’ top of UK’s major concerns* and volatile UK pump in the past 12 months, a fuel duty hike would have been the straw likely to break UK drivers’ budgets. The Chancellor’s decision to scrap the proposed fuel duty hike in September is therefore very welcome and makes good sense, according to the AA.
Edmund King, AA president, said: “A September a fuel duty hike would have been the last straw likely to break UK drivers’ budgets and would have led to a summer of discontent. The freeze is a pragmatic move and will bring some relief at the pumps. Already 76% of AA members are cutting back on journeys, household expenditure or both, due to the high cost of fuel.
“With current fuel prices at 138.42 for petrol and 145.24 for diesel, drivers will welcome the scrapping of the fuel duty hike with relief rather than with joy. Prices are almost 5p a litre higher than when the Chancellor froze fuel duty in March 2011.”
The latest fuel price swing, through February and March 2013, peaked at 140p a litre. Had January’s scheduled 3p rise in fuel duty gone ahead, attracting an additional 0.6p in VAT, it would have propelled the UK average petrol price well beyond the current record price of 142.48p.
Reacting to news that Fuel Duty is frozen FairFuelUK spokesman Quentin Willson said: ‘This is welcome news for families and businesses across the UK as far as it goes. It is a sign that the Government is listening, but there will be widespread disappointment that the cancellation of this duty rise gives them 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.
Petrol Retailers Association
The Petrol Retailers’ Association welcomes the Government’s decision to cancel the fuel duty increase due 1 September.
Taking into account the projection of RPI% in the first quarter of 2014, combined with the current 20% VAT rate, this action will save the motorist up to 3ppl. This could even stem the continuing decline in overall retail fuel volumes, which according to last year’s Government statistics dropped by 2.9% compared to 2011.
However with the Treasury benefiting from the tax windfall of higher VAT over the last two years on ever rising fuel prices, independent retailers had wanted this windfall to be used to cut fuel duty in this Budget. This was a view shared by many motoring organisations and trade bodies.
It is clear that high fuel prices are a significant factor in the upward trend for inflation. They continue to take money out of consumers’ pockets thus weakening their spending power and stifle economic growth particularly for SME’s. The Chancellor has missed a golden opportunity to start correcting the penal 60% tax on retail road fuels.
The Freight Transport Association has welcomed the Chancellor’s decision to cancel the fuel duty rise planned for 1 September, but has expressed disappointment that the pleas of industry and consumers to reduce fuel duty have been ignored.
In its pre-Budget submission to the Chancellor, FTA said that in order to ease cost pressure on domestic freight activity and stimulate economic growth through consumer demand, road fuel duty should be reduced by 3 pence per litre, with commensurate reductions in the duty rate for gas oil.
James Hookham, FTA’s Managing Director of Policy and Communications said: “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.”
FTA has been at the heart of the FairFuelUK campaign to have all fuel duty increases scrapped and lobbying will continue for a reduction in the current level.
FTA acknowledged that duty rates for natural gas and biomethane relative to diesel rates have been fixed for a further year. 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 continued: “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.”