Diesel Duty: Don't add to industry's woes warns FTA

The Freight Transport Association has told Exchequer Secretary Angela Eagle that she must abandon plans to increase fuel duty by 2 pence per litre from 1 October 2007.

Since the end of January 2007 bulk diesel prices paid by hauliers have risen by over 5 pence per litre as world oil prices have soared from $60 per barrel to $76 per barrel - less than $2 shy of their all-time high. Fuel costs alone have raised annual operating costs for a 40 tonne artic by £2,300. With 30 per cent of hgv operating costs fuel related, industry is seeing its road transport costs spiralling at an annual rate of over 5 per cent from this cost element alone.

Simon Chapman, FTA's Chief Economist said, 'The planned fuel duty increase of 2 pence per litre may have seemed reasonable to the Chancellor at the time of the Budget when oil prices were at $60 per barrel. However, the policy now looks out of touch bearing in mind recent fuel price changes.

The Chancellor should announce a change of plan, recast his revenue budgets, and signal a freeze in fuel duty until 1 April 2008 at the earliest.

'UK operators already face far higher fuel prices than road carriers based elsewhere in the EU. The current UK bulk diesel price of 77.9ppl compares to 60.1ppl in Germany, 57.1ppl in France, 54.1ppl in the Netherlands and 50.5ppl in Belgium. Such a wide cost differential to a major cost input into the industry places UK hauliers at a marked cost disadvantage compared to foreign carriers providing haulage services in the UK on a cabotage basis. Ratcheting up fuel prices still further will undermine competitiveness and inject inflationary pressure into industry's cost base.'