Leading trade body the Freight Transport Association (FTA) has condemned the Chancellor's move to increase fuel duty to offset cuts in VAT. The FTA has warned that his decision is a cynical and disgraceful targeting of commercial vehicle operators to help fund his other tax give-aways.
James Hookham, FTA's director of policy, said:
"For a Chancellor who said he wanted to support British business through these troubled times, Alastair Darling has a cynical disregard for the cashflow problems of many small and medium sized commercial vehicle operators across the country. By offsetting the reduction in VAT with an increase in fuel duty, he has added thousands to the transport bills of companies across every sector. Not only does this hurt businesses directly, it also hurts the consumer, who will end up paying more to cover transport costs of items such as food, clothing and white goods. Christmas suddenly got even more expensive."
The Chancellor's Statement held few warm words for the logistics industry, but the 'fuel duty snatch-back' shows that the devil is in the detail. The Chancellor confirmed a further increase in fuel duty of 1.84 pence per litre in April 2009 and remained silent on the planned reintroduction of the fuel duty escalator from April 2010. This led FTA to issue another warning to its members: beware of bear traps which could be in store for business.
James Hookham continued:
"As far as the logistics sector is concerned, the Chancellor is giving with one hand and taking away with the other. If he is determined to continue to use motorists as a cash cow, then businesses in the road haulage sector will suffer, possibly terminally. He has heard the arguments for the introduction of different fuel duty rates for car drivers and commercial vehicles: now he needs to act."
While the commercial vehicle sector will be reeling, there was some light for the logistics industry with the abandonment of per-plane aviation tax proposals. The Chancellor will increase and expand air passenger duty, rather than place a further tax burden on air freight.
Christopher Snelling, FTA's Head of Global Supply Chain Policy, said:
"We will be looking at the proposals in detail, but, on the face of it, this is good news for all those involved in air freight. Credit should be given to the Government for taking the common sense approach. Air freight does have an environmental impact, but this needs to be addressed at the European level to avoid the UK being handicapped against continental rivals as a place to do business."
FTA welcomed Mr Darling's announcement to invest in the motorway network, although it remained cautious until details of the proposed schemes are revealed.
FTA also pointed to a missed opportunity for the Chancellor to bring much-needed funds into the Treasury coffers, and also to ensure overseas haulage vehicles pay their way. The Eurovignette, or 'Britdisk', was a Labour commitment in 2001, yet there has been little or no movement.
FTA Chief Economist Simon Chapman added:
"At a time when the Treasury cupboards are bare, we are surprised that the Chancellor has not taken the opportunity to fill them with up to £30 million. We've been waiting for the Eurovignette for eight years, during which the number of overseas trucks on our roads has greatly increased. Surely the Chancellor is missing a trick?"