"With the price of fuel now clearly impacting on inflation, the time has come for the Chancellor to cancel the fuel duty increase scheduled for 1 April," said Ray Holloway, director of the RMI Petrol Retailers Association (PRA), commenting on inflation figures announced earlier this week. January’s Consumer Prices Index (CPI) inflation figure rose to 2.2 per cent, up from 2.1 per cent in December 2007.
The rate is the highest since June 2007. The largest upward pressure came from the price of fuel. Holloway said: “This outcome was inevitable and has formed the basis of
all messages fed into the Chancellor by the PRA for some time. With the impact of rising duty now clearly affecting inflation, going ahead with the fuel duty rise on April 1 would be unwise, especially at a time when summer demand for fuels will be starting to push prices upwards. “Increasing fuel tax would mean further price increases for the consumer, and would almost certainly push a number of forecourt businesses out of business as a result.”
Holloway added: “Many fuel retailers are barely clearing costs. There are now less than 9,500 forecourts in the UK, including supermarket filling stations. This is the lowest number of filling stations in the UK since 1912. The situation could become critical if the total number of forecourts continues to drop at the rate of recent years. The Chancellor must recognise the effect that a duty rise would have and cancel it as soon as possible, as well as reviewing how and when small businesses pay Excise Duty on fuel supplies.”
The PRA is among a group of organisations which have written to the Chancellor urging him to scrap plans to hike fuel duty again in April. The letter calls on Alistair Darling to abandon the move to add another 2ppl to the price at the pumps from April 1, warning it will create “serious difficulties” for forecourt industries and other sectors in the UK.
The letter, co-signed by PRA director Ray Holloway, and 11 representatives of key organisations in the transport industry, reads:
“Sir – At 50.35ppl, UK fuel duty for diesel and petrol is already the highest in Europe. Indeed UK diesel duty is double the EU average rate of 25ppl. The Chancellor now plans to increase this by 2ppl from April 1. Such an increase will generate further serious difficulties for the transport and forecourt industries, business drivers, those dependant on the car, and for businesses or individuals in remote or rural areas with no alternative transport options.
“During the past eighteen months the whole of UK industry has experienced increased costs as a consequence of higher oil prices on the world market. At a time when we are suffering from the joint threats of an economic slowdown and increasing inflation, the higher costs of transporting goods and services resulting from price rises for fuel have impacted on every single company throughout the UK, and thus on their customers.
“Clearly the Chancellor can have little or no influence on the world price of oil, although he enjoys unbudgeted income when it rises. However, he is responsible for the greater part of the cost of diesel and petrol which is made up of fuel duty and VAT. These taxes constitute almost two-thirds of pump prices – for every £1.05 per litre the Government collects 66p.
“In the interests of every company moving goods and their customers, and of the economy in general, we the undersigned call on the Chancellor to recognise these problems and to abandon his plans for a 2p per litre increase in fuel duty from 1 April.”
“The letter is signed by representatives from the Freight Transport Association, Road Haulage Association, Automobile Association, British Association of Removers, British Chambers of Commerce, Confederation of Passenger Transport, Federation of Small Businesses, Forum of Private Business, National Farmers Union, Petrol Retailers’ Association and the RAC Foundation.