There has been a luke warm reception from industry bodies following chancellor George Osborne’s continued fuel duty freeze, with both the FTA and RHA calling for a 3p tax cut to secure the UK’s economic recovery.
Responding to the budget, the Freight Transport Association (FTA) said that while “common sense prevailed” it would continue to campaign for cuts on behalf of its members.
James Hookham, FTA’s deputy chief executive, said: “The chancellor has listened to the voice of industry by keeping fuel duty at current levels, which is to be welcomed. However, the Government has emphasised that its primary objective is to protect the UK economy.”
The FTA believes that reducing fuel duty would have a marked impact on achieving the chancellor’s aim. According to the FTA, falling fuel prices have been a major factor in the UK’s improving economy. Despite this, it believes high taxes have minimised the impact for transport operators, noting a mere 13 per cent cut in prices at the pump despite a 43 per cent drop in world oil prices.
“We will continue to campaign with FairFuelUK for a 3p per litre cut in order to stimulate economic growth,” added Hookham.
Welcoming the announcement on a continued freeze of fuel duty, Road Haulage Association (RHA) CEO Richard Burnett said: “The freeze on fuel duty continues the very positive policy of the last government and will give a massive boost to business confidence not only in the road haulage industry but the economy as a whole.
“We would have preferred a 3p a litre cut in duty, to boost both jobs and growth but it was essential that duty was not increased. Our hauliers already pay by far the highest diesel duty in the EU and twice as much as many of our competitors.”
The chancellor also used the summer budget to launch a Roads Fund. From 2020-21 the government, via this fund, will spend all of the revenue raised from vehicle excise duty (VED) in England on the English Strategic Road Network.
“By 2020-21, this government will have trebled investment in improvements to the national road networks compared to 2012-13 levels, investing over £28bn in enhancements and maintenance of national and local roads,” noted the budget report.
Commenting on the chancellor’s commitment to invest in UK roads James Stamp, head of transport at KPMG UK, said: “In the last budget, the Government announced a major road investment program worth £15bn. Today, the chancellor announced that road tax income will be ‘ring fenced’. This provides some clarity about where funding for the ambitious road projects will be found.
“However, we note that while road tax raises around £6bn per year, this is dwarfed by income collected from fuel duty, which is around £27bn. We believe that more of this income should be reinvested in roads and transport infrastructure in line with the chancellor’s statement that money raised from drivers should be spent on the roads they drive on.”
Burnett also noted the absence of financial measures to support the UK’s road haulage industry to recruit and train truck drivers in today’s budget. The RHA believes that this will undermine the country’s economic recovery.
“In his Spring Budget George Osborne recognised the shortage of HGV drivers and pledged action to help,” said Burnett. “This Budget does nothing to help solve the crisis, despite strong representation from across the industry. He has even failed to support the structure put in place by the RHA and JobCentrePlus to get unemployed people into driving.”
In June, the RHA urged the prime minister to deliver a £150m cash injection for driver training to tackle what it describes as a chronic truck driver shortage that threatens to slow the UK economic recovery. By the end of 2016, it believes the UK will be short of 60,000 drivers if action is not taken now.
“The RHA will continue to work closely with the Treasury and other government departments to ensure the Chancellor keeps to the pledge made in the March Budget.”