FTA welcomes fuel duty freeze but says cut would boost economy
The Chancellor of the Exchequer’s confirmation that fuel duty will be frozen next year – saving industry around £186 million – is a positive step but is not enough to deliver significant benefits to the economy, the Freight Transport Association has said. Only a reduction in fuel duty would provide the kind of confidence needed for businesses to invest in the future.
Theo de Pencier, FTA’s Chief Executive said: “George Osborne’s announcement today is good but not good enough. Whilst FTA is delighted with the Chancellor’s confirmation that fuel duty will be frozen next year, we would have liked more, with a cut in fuel prices rather than just a freeze. As with all government announcements the devil is in the detail, and we would have liked the Chancellor to commit to making vehicle excise duty stable.”
FTA and its partners in the FairFuelUK campaign have extensively briefed the Treasury on the economic benefits of a reduction in fuel duty. Two studies – the first by the Centre for Economics and Business Research and the second (on the Treasury’s recommendation) by the National Institute for Economic and Social Research – have shown that a change of approach could deliver significant benefits including creating jobs, boosting GDP, and in some circumstances, delivering a net increase in tax revenues. The modelling shows the effects to be optimised at a reduction of 3ppl – this is the amount by which FTA urged the Chancellor to reduce fuel duty in its pre-Autumn Statement submission.
However, FTA is delighted that Chancellor has taken note of its request to maintain the differential between the main rate of fuel duty and the rate for road fuel gases such as Liquefied Natural Gas (LNG) and Compressed Natural Gas (CNG) for 10 years. This will provide businesses with the certainty they need to invest in alternatively fuelled commercial vehicles.
Theo de Pencier concluded: “We are pleased that the Chancellor has taken note of FTA’s request and has committed to maintaining the differential between the main rate of fuel duty and that for road fuel gases for the next ten years.”
