Staggering fuel duty will delay the inevitable, says FTA

Wednesday 24 March 2010

The Chancellor’s announcement that fuel duty rises will be introduced in three stages, instead of the expected inflation-busting rise of 3p in April, will effectively save industry £150 million and will be a welcome relief. However, it will still represent a significant extra cost to businesses in the aftermath of the worst post-war recession, says leading trade body the Freight Transport Association.

James Hookham, FTA’s Managing Director of Policy and Communications, said:

“For companies struggling to stay afloat, a staggered approach to increasing fuel duty will provide some breathing space. However, any increase in fuel duty, which is an unavoidable business cost, is bad news for the economy in the long term and a staggered approach will delay its inevitably detrimental effects.”

Celebration at the staggered introduction will be muted in the logistics sector, not only as the full 3p will take effect by January 2011, but also because the fuel duty escalator, reintroduced in last year’s Pre Budget Report, is to be extended to 2014.

Hookham concluded:

“If the Chancellor is serious about reinstating business confidence in the UK, he should look on the road transport sector – quite literally the wheels of British industry – as more than just a tempting target for revenue raising.“

Notes for editors

During today’s Budget speech, the Chancellor announced that fuel duty rises of 1 pence per litre will be enforced in April, October and January 2011. The Budget also revealed that the so-called fuel duty escalator, which had threatened to bring above-inflation fuel duty rises up until 2013, has been extended to 2014.

The Treasury would have accrued £360 million had the full 3p rise been enacted from 1 April 2010. By staging the duty increases, the Treasury will forego £120 million from April this year, a further £60 million from October 2010 and £30 million from January 2011, thus saving the logistics sector £150 million.
 

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