Cut fuel tax or face the consequences, industry warns Chancellor 08 July 2015

The FTA (Freight Transport Association), RHA (Road Haulage Association), FairFuelUK, the RAC, Microlise, 33 MPs and others are all warning the Chancellor that failing to freeze or cut fuel duty in today’s Budget could sabotage the country’s economic growth.

All believe that falling fuel prices have been a major contributory factor to the UK's impressive recovery, compared to the rest of Europe.

However, high taxes, they say, mean transport operators haven't benefited as much as they could have done – with only a 13% cut in prices at the pump despite a 43% drop in world oil prices.

As a result, FTA chief executive David Wells last week wrote to George Osborne urging him not to renege on previous promises to hold current fuel duty levels until September.

"Cash flow pressures will cause many businesses to implement cuts if the Chancellor raises fuel duty, and that would be detrimental not only to the businesses themselves but also to the economic growth of the country," states Wells.

Meanwhile, the RHA, while welcoming the Chancellor's actions over the past five years in ensuring that diesel duty hasn't become even more out of step with the rest of the EU, makes the point that it remains by far the highest anywhere in the EU – and represents a heavy tax burden on UK supply chains – double that of some continental Europe competitors.

"We urge the Chancellor to avoid undermining his good work so far and avoid any temptation to increase fuel duty," says Richard Burnett, chief executive of RHA (pictured).

"We urge the Chancellor to act on the research by NIESR, funded by the RHA for FairFuelUK, which showed that a three pence per litre reduction in duty would lead to more growth and job creation," he adds.

And FairFuelUK adds its weighty voice in an open letter to the Chancellor, stating: "Dear Mr Osborne, FairFuelUK and the undersigned MPs from all Parties warn George Osborne that an inflation-based fuel duty rise in the coming Emergency Budget or in future years will lower GDP, cost the UK £8 billion in reduced economic activity, raise inflation and sabotage one of the slowest economic recoveries this country has ever seen."

FairFuelUK goes on to state that even the Treasury accepts that the Government's freeze on duty since 2011 has improved GDP by 0.5% and that low fuel costs are good for the economy.

"The UK already has the highest duty regimes in the EU [and] 98% of FairFuelUK's 1.1 million supporters believe this is too high," says the organisation.

"Research by CEBR confirms that fuel duty is already at an unsustainable level. To ignore 37 million drivers, deny the fact we are reliant on a road economy and side-step haversacks of prestigious academic fiscal research will seem arrogant and reckless."

But as well as urging the Chancellor to freeze or, better yet, cut fuel duty, FTA and RHA are also calling on the government to announce funding for driver training to alleviate the driver shortage crisis in the freight industry.

As the RHA puts it: "The opportunity is: to make a decisive intervention to head off a severe HGV driver shortage so that the industry can strongly support rather than hinder growth; to hasten a reduction in overall unemployment; to strengthen the UK skills base in an essential industry; to increase tax revenues; and to reduce a reliance on drivers from abroad which has already reached a worryingly high level."

RHA is proposing a quality-assured scheme of nationwide grants for employers towards the cost of bringing in new drivers.

"We are asking for grants of £2,500 for C-class licence and Driver CPC initial qualification, and a further £500 to move to C+E," says the RHA.

"The grants should be linked to a system of quality assessment of candidates, such as that set out by the RHA or equivalent," it continues.

"The scheme should be time-limited through to Autumn 2017, when we hope the new Trailblazer scheme will come into force. We cannot afford to do nothing over the next two years."

Author
Brian Tinham

Related Companies
Freight Transport Association Ltd
Road Haulage Association Ltd

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