The Chancellor of the Exchequer must resist any temptation to increase fuel duty when he delivers his Pre-Budget Report on 6 December. The Freight Transport Association says that despite a recent fall in the world price of oil, the present level, at $58 to $60 a barrel, is broadly where it was in August 2005 when he took the welcome decision that prices were then too high to justify an increase in fuel duty and opted not to so do. Less than 18 months later that situation is unchanged and he should adopt the same realistic policy.
FTA Chief Economist Simon Chapman says, ‘The Chancellor’s decision to postpone the inflation-linked increase in diesel duty planned for 1 September, because of the high and volatile world oil price, was very welcome – prices then peaked at $78 a barrel. Although those prices have, thankfully, now fallen back they remain relatively high and there is no guarantee that they will not rise again.
‘UK road transport is obliged to pay the highest rate of fuel duty in Europe at 47.1p per litre duty on diesel. This compares with an average for the rest of Europe of just 22p per litre.
‘With diesel constituting about a third of the running costs of a heavy goods vehicle, and with some high mileage individual vehicles contributing road taxation of up to £30,000 per year, then these high prices are a very real problem which any increase in fuel duty could only worsen.
‘Our ultra high rate of duty produces a competitive disadvantage – UK road transport costs are 5 per cent higher than Holland, 10 per cent higher than France, Spain and Italy, and 20 per cent higher than Eastern European countries. Only German and Irish haulier costs are similar to the UK.
‘The Chancellor must not use the fact that world oil prices in December are cheaper than was the case in August as an excuse to raise fuel duty and to further disadvantage the UK road transport industry. A fuel duty increase at this time would simply make the precarious financial position of UK haulage worse.’
The Freight Transport Association represents the transport interests of companies operating over 200,000 goods vehicles – almost half the UK fleet.
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