Treasury accepts fuel duty cuts good for the economy 15 April 2014

FairFuelUK, the FTA (Freight Transport Association) and RHA (Road Haulage Association) have welcomed the Chancellor's late recognition that cutting fuel duty has a positive impact on the economy as well as the transport industry.

According to a Treasury report issued yesterday (14 April 2014), the cost of freezing fuel duty could be offset by the economic boost it causes.

FTA has called on the Chancellor on numerous occasions to consider the economic benefits that could be delivered by further development of the government's approach to fuel duty.

Resisting the temptation to say 'I told you so', FTA chief executive Theo de Pencier says: "FTA is pleased that the Treasury has accepted our key arguments that fuel duty can be cut without harming the economy.

"From the conclusions in this report today, it does appear as though the Chancellor has caught-up with our findings, and there is now every chance for him to go further and boost growth by cutting 3 pence per litre from current rates."

The case for a reduction in fuel duty is predicated on the consequent increase in spending that it stimulates, and was made by the FTA- and RHA-backed scheme FairFuelUK last year when it commissioned a study by the National Institute for Economic and Social Research.

This showed that a 3 pence per litre reduction in fuel duty would be offset by higher spending by households and businesses.

FTA figures show that every penny of fuel duty costs commercial vehicle operators £116 million a year. For every £1 spent on fuel around 60p is paid to the Treasury. A 3ppl cut would save around £350 million a year for the transport industry.

"This is a massive, historic victory for FairFuelUK," comments Quentin Willson, of FairFuelUK.

"Finally the government has admitted what we've been telling them since 2011 – that low fuel duty helps the wider economy," he continues.

!And today is even more historic because FairFuelUK has proved that cutting tax actually increases consumer spending – so the fuel duty reduction model will be used for other tax cuts, too."

Author
Brian Tinham

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