Use 3p Fuel Duty Cut to Give Cost-Free Boost to Economy, says FTA

Friday 22 September 2017

The Freight Transport Association (FTA), one of the UK’s largest trade associations, is calling on the Chancellor Philip Hammond MP to revitalize the economy by cutting fuel duty on diesel in his Autumn Budget. The request, included in the FTA’s official Budget submission to the Treasury today (22 September 2017), is a move which will have a significant and immediate impact on the nation’s economy, according to the Association’s Christopher Snelling, head of national policy:

“Fuel duty is the unseen and unnecessary brake on the UK economy, adding cost to every aspect of British life. Independent research by the CEBR and NIESR has already demonstrated this*. For example, a cut of 10p per litre would result in the creation of a quarter of a million jobs in just one year – and generate more than £1 billion annually to be spent on goods and services. An impact like this would definitely kickstart the UK economy, and give the nation a positive base from which to tackle the challenges of Brexit.

“A smaller cut of 3p per litre, which is what FTA is asking the Chancellor for, would still be a significant boost to the economy and, the research shows, be close to free for the Government as other tax receipts would rise to replace the lost revenue. On behalf of the logistics industry, we urge Mr Hammond to free up this vital revenue in the Budget to ensure that the logistics industry can keep Britain trading efficiently at home and overseas.”

In the Spring Budget, the Treasury announced its intention to review diesel taxation in the light of air quality concerns. However, as Mr Snelling continues, FTA and its members believe that fuel duty would be the wrong mechanism to use to try to reduce local emissions quickly, particularly as far as the commercial vehicle sector is concerned.

“Currently no viable alternatives exist to diesel for us, and an increase in diesel taxation would not change this in the short or medium term. The vehicles now coming onto the UK’s roads, which meet Euro VI requirements for emissions, are delivering real world 80% reductions in local air pollutants. It is the ongoing introduction of these new vehicles will dramatically improve emissions over the next few years. The quantity of goods the country needs moved won’t change whether duty goes up or down, so any increase in fuel duty would only add cost to the British economy.

UK based users and operators of lorries face particular problems which a duty cut could address. Hauliers are currently undermined by competition from foreign hauliers which can undercut UK costs thanks to their use of cheap diesel from the Continent. In addition, according to FTA, much of the cost of the Government’s air quality plan will fall on the businesses that rely on lorries and vans: a rate cut could help them pay for the newer vehicles the Government wants them to buy.

Also in its Budget submission, FTA has called for equivalent cuts in rail freight and alternative road fuel duties, transforming the Apprenticeship Levy into a Skills Levy to allow more flexible to access the funding, and for continued support for rail and road infrastructure improvements.

FTA represents the business that use or operate freight by any and all modes. Its members operating half of the UK’s lorry fleet (more than 200,000 vehicles) and consign 90% of the goods moved by rail and 70% of the country’s visible exports by sea and air. The sector contributes 11% of the UK’s non-financial business economy. In 2016, 2.54 million people were employed in logistics in the UK, approximately 8% of the UK’s workforce.

* Report by CEBR and “The Impact of Fuel Duty on the Macro-Economy” NIESR, September 2012
FTA Press Office
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