Fleet News

£95 million New Year fuel tax headache for industry, say FTA

The Freight Transport Association (FTA) has condemned the latest increase in fuel duty planned for January 1, 2011, as a New Year's present from the Chancellor that will leave the freight industry with a £95 million hangover.

The increase of 0.76 pence per litre from January is the third rise since April 2010 and will push diesel prices to within four pence per litre of the all-time highs reached in July 2008 when oil prices were at $145 per barrel, according to the FTA.

"Diesel is not an optional extra for industry,” said Simon Chapman, FTA's Chief Economist. “It is essential to keep shops stocked and businesses supplied with materials.

"For the UK to trade its way out of recession its supply chains need to be cost competitive and its roads must provide reliable routes to market. Neither is achieved by a tax base spiralling well above inflation and a transport network starved of investment."

The FTA is concerned that the Government may be tempted to bolster Treasury coffers by using environmental issues to justify fuel duty rises beyond the current commitment.

Chapman concluded: "Ironically, raising fuel tax simply reduces the amount of cash the industry has to invest in eco-driver training and newer, cleaner engines. Fuel duty is not a lever that can be pulled to reduce the logistics sector's carbon emissions, suggesting otherwise is simply ‘greenwash'."

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