27 May 2008
The Freight Transport Association is calling on the Government to make an immediate reduction in diesel duty to EU average levels to alleviate business cost pressures and inflation in the wider economy.
Diesel costs have risen by 34 per cent in the last year and by 15 per cent (14 pence per litre) since the beginning of the year. FTA estimates that fuel will rise by another 4 pence per litre in the coming weeks as the most recent rises in world oil prices filter through into the selling price.
Hauliers have little choice but to pass these cost increases on to their customers. Fuel represents over a third of the costs of running a truck. With haulage margins often only two or three per cent, there is no room for absorbing this input cost rise. However, passing it on through higher rates is generating price inflation on everyday items for business and consumers at a time when cash is already tight as the economy slows.
Simon Chapman, FTA's Chief Economist said, 'The Government cannot continue to stand on the touchline and simply wring its hands over the spiralling cost of fuel. It can do little to influence the world oil price, but reducing the duty on diesel is within its gift. Fuel duty represents around half of the price of diesel. There is nothing to stop the Government, other than political will, reducing the duty on diesel down to EU average levels of 25 pence per litre from its current level of 50.35 pence per litre.
'Diesel is the fuel of industry's supply chains. A decisive cut in duty on diesel would provide welcome relief for businesses and consumers alike. It would take the heat out of the sky high price which the economy is struggling to live with.'
The Freight Transport Association represents the transport interests of companies moving goods by road, rail, sea and air. FTA members operate over 220,000 goods vehicles – almost half the UK fleet. In addition they consign over 90 per cent of the freight moved by rail and over 70 per cent of sea and air freight. FTA's website can be found at www.fta.co.uk