Ahead of tomorrow’s Parliamentary debate on fairer fuel prices, the Forum of Private Business is urging the Government to scrap proposed duty increases in 2012.
Two fuel duty rises next year – the first inflation linked – would hinder the economic recovery and is likely to put many struggling firms out of business, warns the Forum, which has written to the Business Secretary Vince Cable this week highlighting the matter.
David Cameron agreed to tomorrow’s three hour debate in the House after more than 110,000 people signed an e-petition calling for MPs to debate the matter.
The Forum agrees with the motion, tabled by Conservative MP Robert Halfon, which argues high fuel prices are harming the viability of SMEs and is curtailing consumer spending key to growth.
"Our members have seen a continued rise in the cost of business over the last year, and according to our latest survey, 92% of SMEs saw an increase in transport costs," said the Forum’s Chief Executive, Phil Orford.
"An additional fuel duty increase in the current climate simply can’t be justified. Not only would significant tax hikes damage small firms further, it’s highly likely growth would be affected with consumers having less money in their pocket to spend.
"We are at a crucial stage in the UK’s economic recovery. Small businesses will play a central role in this recovery and must be given a tax environment in which they can thrive."
Figures released by the Office for National Statistics this week showed the average household spends around £750 a year on petrol or diesel tax a year, with less well off homes in real terms paying out a larger percentage of their disposal incomes than those on higher wages.
The Forum has been lobbying Government to introduce a fuel duty stabiliser and this week wrote to Business Secretary, Vince Cable, calling for the measure to be looked at again. The letter also asked for the planned inflation increase, deferred in April 2011 to January 2012, to be axed, as well as the further proposed increase in August 2012, deferred from April 2012.
If both rises go ahead it could be as much as 8p a litre at the pumps, taking diesel over a milestone £1.50p a litre.
"An 8 pence a litre rise for diesel and petrol could well become the proverbial ‘straw that breaks the camel’s back’ for many small businesses already struggling to pay exorbitant pump prices," added Mr Orford.
"Not only would this kind of rise hammer SMEs, it would severely dent the finances of every car driving household in the UK and will mean even less consumer spending. Then there’s the knock on effect to prices such as food.
"This is neither acceptable nor conducive with Government plans for recovery in an economy already showing signs of stalling. January’s inflationary rise would be the worst start possible for 2012, with still another rise to come.
"We urge the Government to reconsider and also look once more at a fuel duty stabiliser," he said.