Fuel duty for commercial vehicles – the facts

Despite the recent and welcome fall in the world price of oil, and thus diesel, the UK transport industry remains at a major competitive disadvantage compared with its European rivals due to the excessively high rate of fuel duty imposed upon it by the UK Government. At 50p per litre, fuel duty on diesel for commercial vehicles in the UK is twice the average rate in the rest of the European Union of just 25p. The Freight Transport Association continues to call for a decoupling of the way fuel duty is charged on commercial vehicles from the way it is charged on cars, and a substantial cut in the rate, in order to allow UK industry to compete on level terms with the rest of Europe.

In its latest Fuel Price and Duty Fact Sheet, FTA lays out key information on the way that high oil prices and high fuel duty have impacted on freight transport operations.

FTA Director of External Affairs, Geoff Dossetter said, 'We have to acknowledge that the Government can have only limited influence on the world price of oil. But, because the rate of duty on fuel in the UK is so high compared with the rest of Europe – in fact it is double – it does have the ability to create a new and more realistic way of taxing diesel on commercial vehicles. The transport industry has been calling for such a change for the last ten years and Gordon Brown himself undertook to take action in 2000. Sadly he has not yet done so.

'This is not rocket science – there are a number of ways in which it could be done. But it remains a mystery why our own Government should continue to disadvantage the transport industry in such a way so many years after it admitted and recognised the problem and said that it would deal with it. How much longer do we have to wait?'

Key facts described in the new FTA report include:

Fuel duty represents 47 per cent of the cost of a litre of bulk contract diesel (excluding VAT).

Bulk contract diesel prices have increased by 21 per cent since January 2008.

In 2000, fuel costs were 31 per cent of the total operating cost of a 40 tonne articulated lorry. By April 2008 they had risen to 35 per cent.

The annual fuel bill for a 40 tonne artic running an average mileage of 70,000 per annum increased from £26,456 in 2000 to £39,849 in 2008.

Between April 2007 and April 2008 total vehicle operating costs for a 40 tonne artic increased by 6.5 per cent. During this period underlying inflation rose by 3.9 per cent.

HM Treasury receives around £41 billion per year in tax from road users. But it spends just £1 billion on the strategic road network and a further £2.7 billion on local roads.

UK diesel duty for industry needs to fall by 25p per litre to achieve parity with the rest of Europe.