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Fuel duty cut would be good for the economy

27 November 2014

The Freight Transport Association has written to the Chancellor of the Exchequer ahead of his 2014 Autumn Statement on 3 December, primarily outlining the economic benefits that could be delivered by the further development of the Government’s approach to fuel duty.

In its letter to George Osborne, FTA highlighted how fuel accounts for nearly 40 per cent of the cost of running a 44 tonne truck and that it had risen dramatically over the past twenty years.  The Association told the Chancellor that it estimated that just a one penny increase in fuel duty would add approximately £480 per year to the cost of running just one lorry.

FTA’s Karen Dee - Director of Politics said: "FTA welcomed the Chancellor’s confirmation in the 2013 Autumn Statement of his intention to freeze fuel duty for the rest of this Parliament; however, we believe that the Government should go further and cut fuel duties by 3 pence per litre with commensurate reductions in duty for gas oil, in order to stimulate consumer spending and business investment and re-ignite economic growth.”

As a key funder and supporter of the FairFuel UK campaign for fuel duties to be reduced FTA welcomed the Government’s response to the campaign as fuel duty is now at a far lower rate than it would have been saving the logistics sector £4.44 billion in extra duty had the increases been introduced.  

Ms Dee added: "The current rate of fuel duty costs industry around £6.74 billion a year. In a market place with ever-shrinking borders between countries, fuel duty is also a barrier to fair competition across Europe; the UK diesel duty rate is 24 pence per litre higher than the average rate across the EU. Profit margins within the freight industry remain tight, and therefore, costs increases must be passed on to customers and ultimately to consumers.”

The FTA’s Autumn Statement 2014 submission to the Chancellor also drew attention to the skills shortage in the logistics sector, and in particular the lack of funding to support vocational training to improve recruitment and skill levels in the industry.  The Association stated that vocational training needs a loan system equal to the student loans available to university students.

Karen Dee stated: "FTA is calling on the Chancellor to ensure that sufficient funding is available to allow for the development, introduction and continued support of a student- loan type system for those seeking to acquire vocational skills.”

The FTA submission also raised the need for the Chancellor to ensure that the Roads Investment Strategy provides sufficient funding to deliver the full approved programme of road improvements; adding Mr Osborne must ensure that both the Highways Agency’s and local authorities’ revenue budgets are increased to allow for improved maintenance of existing roads.