£325m fuel duty reprieve for UK operators

London, UK:  Chancellor George Osborne has cancelled January’s 3.02 pence per litre fuel duty hike in his Autumn Statement today.  If the planned increase in fuel duty had been left unchecked, industry would have been picking up the tab for an additional £325m on its annual fuel bill says the Freight Transport Association.

The chancellor’s decision will provide a much needed lifeline to many businesses as the price of diesel has risen by over 13ppl (13.9%) in the last year, representing an extra £1.4 billion cost to road freight operators, it says.

Theo de Pencier, chied executive of the Freight Transport Association said: “while we are relieved that the chancellor has steered us out of immediate danger, it is obvious that getting the UK back on the road to recovery requires a long-term fuel duty strategy, and one which doesn’t make tough times that much tougher for businesses in an already uncertain economy.”

Overall, commercial vehicle operating costs have risen by 6.2% in the year while over the same period haulage rates have risen by 4.5%t.  As a result, profit margins, which are typically less than three per cent in the haulage sector, have been under significant pressure, he says.

But the chancellor “has not been bold enough” de Pencier says.  “He should have ruled out the planned 3 pence per litre duty rise in August 2012 as, if world oil prices remain high and above $100 per barrel into next year, it will still hit industry hard.”

• Fuel duty represents 51% of the cost of a litre of bulk diesel (excluding VAT) as at 25 November 2011.

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