A decision by the chancellor to extend last year’s 5ppl fuel duty cut for a further year has been widely welcomed, but his failure to provide targeted support for businesses struggling with soaring energy bills has been condemned.
He was also criticIsed for the absence of any incentives for the EV market.
In today’s Budget Jeremy Hunt announced that he would be maintaining the freeze on fuel duty and that the 5ppl cut introduced last year would be extended for a further year.
Welcoming the decision on fuel duty PRA executive director Gordon Balmer commented: “Petrol and diesel prices are still extremely volatile due to the ongoing war in Ukraine. Many motorists will breathe a sigh of relief at the chancellor’s decision to extend the fuel duty freeze and maintain the 5ppl cut.
“We welcome the government’s commitment to keep fuel duty rates under review and hope that they will continue to do all they can to ease the burden of high energy prices on motorists.
“As always, our members are committed to keeping their communities fuelled and fed.”
The move was also welcomed by Sue Robinson, chief executive of the National Franchised Dealers Association (NFDA), which represents franchised car and commercial vehicle dealers across the UK. She said: “NFDA supports the chancellor’s decision to maintain its freeze on fuel duty, supporting UK motorists considerably. Fuel costs are still yet to return to pre-pandemic levels and costs the average vehicle owner between £1,300 and £1,800 annually. Fuel has now become a key expenditure for families in the UK and any increase would have had detrimental impacts on family finances, especially in rural areas where public transport is not a viable alternative.”
RAC head of roads policy Nicholas Lyes said: “We welcome the government’s decision to keep the 5p fuel duty cut in place for another 12 months. The cut has given drivers some much-needed relief in what has been the most torrid year ever at the pumps, with price records being broken even after duty was cut. Given the importance of driving for consumers and businesses, duty should be kept low to help fight inflation.”
However, the Association of Convenience Stores (ACS) condemned the chancellor’s failure to put in place target support for the almost 7,000 local shops it said were facing closure this year as a result of high energy costs.
From April, the government will press on with untargeted, support for 12 months through the Energy Bills Discount Scheme, with a discount of 1.9p per kWh for electricity. This will reduce an average eligible convenience store’s energy bill by around £1,520 for the year.
ACS warned that convenience stores that signed fixed contracts during the height of wholesale prices (Q3/Q4 2022) are those most likely to be at risk of closure, due to the tripling or in some cases quadrupling of their energy bills for the duration of the fixed-term contract. There are up to 6,900 stores facing rates of 80-90p per kWh and above this year.
ACS chief executive James Lowman said: “A Budget focused on growth and investment will come as no comfort to those who will have their entire profit margins wiped out this year by excessive fixed energy contracts. Convenience stores have been left out in the cold by the Chancellor, being left to face crippling energy bills by themselves and putting thousands at risk. Difficult decisions will have to be made in the coming months by independent retailers about the future of their businesses, which will have a negative impact on investment and reduce the number of available jobs in communities, all while bolstering the profits of energy companies.”
The Federation of Independent Retailers (the Fed) was similarly critical.
The Fed’s National President Jason Birks said: “I and other trade associations wrote to the chancellor and the business secretary just last month imploring them to provide the necessary help for struggling small businesses.
“It is, therefore, extremely disappointing that our calls for assistance have not been answered.”
Birks said the tax rises on alcohol and tobacco will also lead to an increase in illicit trading, which again is harmful to honest shopkeepers and fuels organised crime.
He added: “The chancellor has shown a complete disregard for shops that are the lifeblood of their local communities.
“I make no bones about it - we will see many forced to close their doors for good as businesses become unviable in the current economic climate.”
The chancellor was also criticised by the NFDA for the absence of any incentives for the EV market. NFDA chief executive Sue Robinson said: “We are extremely disappointed that not a single mention of electric vehicles or charging infrastructure was mentioned in today’s Budget announcement. If the UK government’s goal is to stop the sale of new petrol and diesel cars and have 300,000 charge points in place as a minimum by 2030, there needs to be much more significant investment – and this has to be incentivised by the chancellor in future Budgets.
“The recent announcement to introduce Vehicle Exercises Duty (VED) for electric vehicles in 2025 has reduced the appeal of buying a new electric car as motorists will no longer benefit from a tax-free purchase that differentiated it from its Internal Combustion Engine (ICE) counterpart. This sent the wrong message at the wrong time and the Chancellor still has not established a policy on electric vehicles that sends the right message. Today, NFDA believes, was a missed opportunity to create a comprehensive road tax scheme.
“Going forward, government support will be critical to the success of the electrification of the vehicle parc in the UK. Government’s neglect to support the less affluent from purchasing an EV, a product which remains a price premium and a significant barrier to adoption, risks undermining the movement and their net-zero targets and destabilising the EV market.”
Other announcements in the Budget include:
- alcohol and tobacco duties will rise by the rate of RPI as planned, with the exception of draught relief in pubs;
- full capital expensing will be introduced for the next three years, with every found a company invests in IT equipment, plant and machinery being eligible to be deducted from taxable profits;
- the government will offer ‘returnerships’ targeted at the over 50s who want to return to work;
- childcare reforms to make it easier for parents to return to the workplace.