FTA: “fuel duty freeze is a missed opportunity”

With the Chancellor delivering his budget this week, the FTA has commented on the decision to freeze fuel duty.

While the decision to freeze has been welcomed by the logistics sector, the FTA suggest that a cut would have done far more to boost the economy. The logistics sector is battling a five year high in inflation and while the freeze helps, it is not enough to make any great difference in the sector.

The FTA, the UK’s largest membership association for the whole logistics sector, has been campaigning for a 3p cut in fuel duty for some time. A cut would provide a significant and immediate positive impact on the nation’s economy, they say.

Christopher Snelling, FTA’s Head of National Policy, said the freight industry is disappointed by today’s Budget announcement, with the belief that the Chancellor could have gone far further to assist the sector which supports all other businesses across the UK.

He said: “A freeze in fuel duty is a welcome decision, but it demonstrates a real lack of ambition by the Chancellor. The cost of moving goods around the country and overseas determines the cost of doing business in Britain and the price of goods in our shops. At a time when British business is under extreme pressure to prove its credentials and reinforce existing trading relationships, Mr Hammond has missed an opportunity to cut these costs, and make the UK a more competitive place to do business.

“Fuel duty increases would have been the wrong tool to use to address air quality. As logistics operators currently have no practical alternative to diesel it would have produced no change in behaviour, just adding cost to those businesses who are facing the burden of the planned Clean Air Zones.”

Research conducted by the FTA has shown that the price of diesel accounts for nearly a third of the operating costs for an average 44 tonne truck, meaning that just a one penny increase in the cost of a litre can add £470 a year to the cost of running one of vehicle. With fleets running to hundreds or even thousands of vehicles, this rise in cost can have a significant effect on operating margins and future solvency. This can lead to more companies being declared bankrupt. Statistics from the Insolvency Service shows the number of freight firms filing for insolvency between April and June was almost double the same period last year and has reached its highest level in five years. In the three months up to 30 June 2016, 32 UK road freight companies declared insolvency, just a year later, the figure had reached 59.

FTA, whose membership operates almost half the UK’s HGV fleet, says the sharp increase illustrates the impact of rising fuel prices and a weakening economic outlook on the logistics industry.

 

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