Fuel duty freeze: good but not great, says industry 17 March 2016

The transport industry has reacted broadly favourably to the fuel duty freeze announced in yesterday’s (16 March 2016) Budget, with the RHA (Road Haulage Association) stating that it will help retailers “and provide a sound base for economic recovery”.

“A tax on diesel is a tax on the entire economy, the vast majority of which is carried on the back of a truck,” comments RHA chief executive Richard Burnett, pictured.

“It has been widely publicised that the economy is slowing down yet the one area that remains buoyant is the retail sector: the Chancellor’s decision to freeze duty will keep money in people’s pockets.”

That said, while welcoming the freeze, the FTA (Freight Transport Association) has also expressed disappointment that the Chancellor did not take the opportunity to reduce fuel duty – stating that he could have done better.

FTA figures estimate that every penny of fuel duty costs commercial vehicle operators £120 million a year. A three pence per litre cut in fuel duty, it estimates, would have saved around £350 million a year for transport operators alone – money that would have stimulated the fledgling economy.

FTA also laments that its pre-Budget submission pointing to skills shortage in the freight and logistics industry, went unnoticed.

James Hookham, FTA managing director of policy and communications, says George Osborne missed an opportunity.

“A further freeze of duties is welcome but the Chancellor missed a chance to give a boost to the stuttering economy by reducing the tax on an essential business input”

Meanwhile, Quentin Willson, of pressure group FairFuelUK, believes that fFreezing duty for a fifth year running is hugely significant.

“The Treasury now has five years of evidence to prove that keeping fuel duty low has helped improve GDP, stimulate economic activity and improve tax receipts,” he explains.

“The Chancellor knows that low transport costs have had an enormous economic benefit to the UK over the last five years.”

And Howard Cox, founder of FairFuelUK, adds: “By not hiking fuel duty, Osborne has ensured that £5bn is not taken from consumer spending in this Parliament.

“His decision has ensured continued growth in GDP, low inflation and new jobs will not be compromised, with added benefits of more VAT, income and corporation tax revenue too.”

Only the SMMT (Society of Motor Manufactures and Traders) takes a more holistic view, with chief executive Mike Hawes welcoming the Chancellor’s support for energy-efficient technologies (through the extension of Climate Change Agreements and the forthcoming consultation on company car tax for ultra low emission vehicles), but expressing disappointment over business rate reforms.

“The removal of plant and machinery from business rates valuation would have encouraged investment in innovative manufacturing technologies, improving still further UK automotive industry productivity,” he says.

Brian Tinham

Related Companies
Freight Transport Association Ltd
Road Haulage Association Ltd
Society of Motor Manufacturers and Traders Ltd

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