The Road Haulage Association (RHA) warns of severe challenges for the haulage sector if the current fuel duty freeze is lifted.
- Government speculation about a potential 7ppl fuel duty rise raises concerns before the upcoming budget announcement.
- RHA’s Richard Smith highlights the detrimental impact on businesses already dealing with high diesel costs.
- Economic repercussions include a potential £430m loss to Britain’s national income annually.
- Calls for government action to approve the delayed Lower Thames Crossing project accompany the warnings.
The haulage sector faces a critical juncture as the Road Haulage Association (RHA) issues a stark warning regarding the possible removal of the existing fuel duty freeze. This alert comes amidst increasing speculation that the government might raise fuel duty by 7p per litre, sparking significant concerns among industry stakeholders ahead of the upcoming budget announcement scheduled for 30 October.
Richard Smith, the Managing Director of the RHA, articulated the challenges confronting the sector, particularly emphasising fuel costs. He pointed out that diesel prices in the UK are higher than in any other EU member state, contributing to 31-36% of operating costs for businesses involved in road transport, whether it be HGVs, LGVs, or coaches. Smith asserted that with current operational expenses already elevated and profit margins critically squeezed, many firms would struggle to withstand the financial pressure of a fuel duty increase, potentially leading to insolvency, especially among the UK’s Small and Medium-sized Enterprises (SMEs).
In addition to immediate business concerns, the RHA’s analysis foresees broader economic repercussions. It suggests that a modest 5p increase in fuel duty could result in a reduction of £430 million from Britain’s national income every year for the next five years. This projection underscores the potential for a ripple effect throughout the economy, heightening inflationary pressures and adversely affecting both businesses and consumers.
Further complications arise from the country’s gradual transition towards electric vehicles, as highlighted by PricewaterhouseCoopers (PwC). Grant Klein from PwC identified the ‘boiling frog’ dilemma, where a shift to electric vehicles generates a revenue gap due to decreased collections from traditional fuel duties. The impending transition challenges the government to balance net zero objectives with sustainable fiscal policies.
Parallel to the fuel duty discourse, the RHA has also called for expedited government approval of the Lower Thames Crossing project near London. Following another delay announced by the Transport Secretary, the RHA urges the government to provide the green light for this significant infrastructure initiative. The project is perceived as vital to enhancing transport efficiency and economic connectivity in the region, which could offset some of the logistical challenges posed by potential fuel cost increases.
The RHA’s warnings highlight the precarious position of the haulage sector amid potential policy shifts, necessitating careful governmental consideration.
