The anticipated increase in fuel duty has sparked significant debate, with reports suggesting a hike of 10p per litre.
- Lobby group FairFuelUK claims to have ‘credible intelligence’ of the government’s plan to introduce this rise in the October Budget.
- The economic impact of such a decision is under scrutiny, as previous freezes on fuel duty have provided some relief during economic turbulence.
- Key stakeholders including Logistics UK and the RHA have voiced concerns, highlighting risks to economic recovery and industry stability.
- The government’s final decision, expected to be clarified in the upcoming budget announcement, remains anxiously awaited by all parties.
The potential increase in fuel duty by 10p per litre has emerged from claims put forth by the lobby group FairFuelUK, which suggests that the government is planning this change for the upcoming October Budget. Given the economic backdrop, where Prime Minister Keir Starmer has highlighted a significant £22 billion fiscal deficit, the decision to raise fuel duty becomes contentious. Historically, fuel duty has been frozen, with a temporary reduction earlier this year, presenting a dilemma now as further adjustments are considered.
In a recent address, the founder of FairFuelUK, Howard Cox, underscored his belief in these claims based on ‘credible intelligence’ regarding the Treasury’s internal economic strategies. His long-standing argument against increasing levies on an already heavily taxed sector is rooted in the potential negative consequences on the economy, impacting jobs, inflation, and business investment. Cox further anticipates future developments such as a shift towards ‘pay-per-mile’ taxation, aimed to counteract declining fuel duty revenues.
Logistics UK and the Road Haulage Association (RHA) are vocal in their opposition, urging the Chancellor, Rachel Reeves, to maintain the current duty rate. With the logistics sector operating on narrow margins, an increase in fuel duty could exacerbate financial pressures on operators, who are already grappling with escalating costs and commitments towards a net-zero transition. The RHA has highlighted the existing strain on the sector, noting a 10% rise in insolvencies, and is advocating for measures such as a fuel essential user rebate to mitigate this.
In light of these pressures, industry voices are calling for a strategic approach from the government to facilitate economic recovery without imposing additional burdens on businesses and consumers. The potential consequences of the proposed fuel duty increase extend to higher operational costs across the haulage industry, risking further insolvencies amid rising wage and vehicle production costs.
A Treasury spokesperson acknowledged the challenges faced, emphasising that forthcoming fiscal policies will address the foundational financial issues left by previous administrations. The government’s approach to addressing the £22 billion fiscal gap includes difficult decisions on spending, welfare, and taxation, with the budget announcement anticipated to clarify these points.
The anticipated fuel duty increase has sparked serious industry concern, pending clarity in the forthcoming budget.
