The Freight Transport Association has told the Chancellor of the Exchequer that his Budget must abandon plans for a 2p per litre increase in fuel duty from 1 April. FTA says that with the world price of oil now exceeding $100 per barrel, and forecast to rise further throughout the spring and summer, the imposition of a further cost increase will result in severe problems for both the UK transport industry and for all industrial users of transport, together with price rises for consumers.
Costs in the road transport industry are currently rising at an annual rate of 8.4 per cent for a 40 tonne articulated lorry and by 7.5 per cent for a smaller 18 tonne rigid. This is well in excess of underlying inflation, which is running at 3.4 per cent
The proposed 2p per litre increase from 1 April would be the second rise in six months and comes on top of a 12.5p per litre increase in product prices during 2007. Hauliers and their customers are already struggling to contain costs and such is the fuel duty burden on the industry that operators are obliged to delay vehicle replacement plans and to focus on short-term business solvency rather than longer term measures to improve transport efficiency.
FTA Director of External Affairs, Geoff Dossetter said, 'Diesel is the lifeblood of UK industry and the sky-high fuel duty level imposed on it already makes UK diesel prices the highest in Europe. Almost everything that we all consume every day is the product of a lorry journey and around a third of the cost of lorry operation is the diesel that those lorries consume.
'The Chancellor is planning to further increase the cost of those lorry journeys from April and this will hit the pockets of the whole population. He must recognise the problems of the transport industry, recognise the impact on consumers, and abandon his plan to take even more tax.'
FTA, which represents the transport interests of companies moving goods by road, rail, sea and air, says that the Chancellor must consider the option of decoupling duty paid on diesel used by heavy goods vehicles from that for other road users. For most journeys freight transport does not have any choice of mode and road freight is often the only way of servicing business customers and consumers. Diesel used in lorries is an industrial fuel and should be taxed at a lower rate than unleaded petrol.
FTA's Budget submission also called for the Chancellor to abandon plans to increase gas oil duty used to fuel rail freight, to freeze Vehicle Excise Duty levels for commercial vehicles, and to introduce a charge on foreign lorries working in the UK.