Businesses “on borrowed time” after fuel duty hike, says FTA

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The FTA has released statements that many logistics operators could be operating “on borrowed time” after the fuel duty rises on Friday.

This is the second of three planned fuel duty rises during 2010/11, and comes into effect on 1st October. It will add another £125 million per year to industry’s transport bill, and the FTA has warned that this may be disastrous for businesses struggling out of the recession.

Simon Chapman, the FTA’s chief economist, said: “Diesel is an unavoidable expense and accounts for a third of the costs of running a truck. Successive, above inflation tax hikes since 2009 mean the freight industry is shouldering a disproportionate burden in narrowing the public sector deficit. With another rise due in January and above inflation rises set for the next three years, many businesses hit hard by the recent recession will feel like they are on borrowed time.”

The cost of diesel at the pumps is accelerating away from the rate of inflation and Friday’s diesel duty rise of 1 pence per litre to 58.19ppl, will see this gap widen further.

Chapman said: “The price of oil is the highest it’s been for three months and is set to rise further as we come into the autumn peak period of oil demand. With economic recovery still so fragile, now is not the time to compound the problem with artificial price hikes.

“With the duty hike affecting petrol too, the Treasury will net an extra £500 million a year in total from all road users. For every £1 of tax raised from road users, just 22 pence is currently spent on the road network. If the government persists with the strategy of above inflation rises in fuel duty, it should ‘ring fence’ the element that exceeds inflation and invest it in those road and rail networks in most urgent need of improvement.”


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