The government has been savaged by vehicle operators and industry organisations for introducing an increase in fuel duty.
The recent pre-Budget report saw Chancellor of the Exchequer Alistair Darling add 2p a litre to fuel duty, which experts claim more than offsets the 2% reduction in VAT he announced at the same time and will make the industry worse off in the long run.
John Lewis, director general of the British Vehicle Rental and Leasing Association, said: “While the reduction in VAT is temporary, the increase in fuel duty is not. Businesses can reclaim the VAT cost of their fuel regardless of the rate, but they cannot reclaim fuel duty.
“Hauliers and other businesses that depend on road transport will be bitterly disappointed by this devastating increase in costs. The Chancellor has given the road transport industry a real kicking.”
Road Haulage Association chief executive Roger King, said: “This is an outrageous announcement.
“The Chancellor claims that the increase in duty is offset by a reduction in VAT. But he does not seem to appreciate that while this may be true for motorists, it is not true for hauliers because they can reclaim VAT in full.
“So this represents a real increase in the industry’s operational costs and is not what we expected or what UK plc deserved. More than a million tradesmen and businesses could see costs rise because of the changes.”
Overall, the change will affect 4.7 million company cars, 2.5 million vans and 500,000 lorries and could cost traders up to £1 billion, experts have warned.
James Hookham, of the Freight Transport Association, said: “Not only does this hurt businesses directly, it also hurts the consumer, who will end up paying more to cover transport costs of items such as food, clothing and white goods.”