The PRA has welcomed the Chancellor’s decision to invest in road infrastructure and not to raise duty on fuel in his Autumn Statement today.
PRA chairman Brian Madderson said: “In recent weeks, we have been meeting with Treasury officials to discuss the impact of a fuel duty cut and have made a number of representations to ministers about the economic impact of an adverse exchange rate and higher oil prices.”
He said petrol retailers had calculated that average UK pump prices could reach 120ppl by the year end, a significant price increase of nearly 20% in just 12 months.
HM Treasury’s own study (2014) into the dynamic effects of fuel duty reductions has shown that the additional spending generated from cutting fuel duty has brought in more income tax and VAT than would have ever been raised by letting fuel duty rise.
In 2016 the freeze in duty boosted GDP by 0.57%, generated 112,000 new jobs and put £5.3bn back into consumer spending. It also bolstered tax revenues by 0.2%.
Madderson added: “Trend volume sales in diesel have delivered a tax windfall to the Treasury of £1bn and we will be looking to persuade the Chancellor to deliver an actual fuel duty cut in the Spring 2017 Budget.”
The RAC also welcomed the duty freeze. RAC fuel spokesman Simon Williams said: “The Chancellor’s commitment to freeze fuel duty will be greeted with relief by motorists and businesses at a time when we know drivers are concerned that fuel prices will rise significantly over the next six months – which might be the case if oil-producing countries that are members of OPEC commit to an oil production cut when they meet this time next week.
“The Chancellor’s decision to extend the freeze shows that he understands that motorists are the backbone of the British economy. It is vital that in such uncertain times, the Government can give as much certainty to them as possible.”