Why Should Fuel Duty Be Freezed This Autumn?

According to FleetNews, Chancellor Rishi Sunak is considering ending a ten-year freeze on fuel tax in his upcoming Autumn Budget, which could see fuel duty increase by 5p. This measure is rumoured to be be considered due to the Coronavirus crisis and the impact that it has had on the country’s economy. However, organisations such as FairFuelUK which is backed by the Road Haulage Association (RHA) and Logistics UK (formerly FTA), has said it will “fight tooth and nail” against these plans.

Today, we’re looking at how a continued freeze of fuel duty will aid the recovery of the logistics industry following the hard times that it too has endured following the Covid-19 pandemic.

What Could A Hike In Fuel Duty Mean?

If the end to the freeze on fuel duty occurs during the Autumn budget, then this will bring a myriad of implications for those working in the logistics industry. From drivers, to company owners – the impact will be felt across the board.

According to FairFuelUK, UK drivers are still the most taxed in the world. They also predicted that had the fuel duty escalation continued as planned from 2011 onwards, as opposed to the freeze that was introduced, fuel duty today would be 83.33p per litre rather than 57.95p per litre, 43.8% higher. A serious expense for household drivers, as well as logistics companies.

A lift on restrictions on fuel duty this Autumn means that the price per litre that is paid for fuel can increase to no end. Currently, rates are capped at 57.95 pence per litre for petrol and diesel, but a lift of this freeze in prices could see this figure rise by as much as 5p.

An increase of this magnitude could seriously impact the recovery of the logistics industry following months of uncertainty. Higher fuel costs, meaning the price per job increases and either profit margins get lower, or prices have to increase. Either outcome is not favourable for logistics providers and their clients, this is why the industry must rally behind the likes of FairFuelUK, who are imploring the Government to consider the logistics sector, and what the end of the freeze on fuel tax could mean for it.

How Freezing Fuel Duty Will Aid Recovery

On the other hand, if a more favourable outcome is found in the Autumn 2020 budget, namely a continuation of the freeze on fuel duty, then this can help to aid the recovery of the logistics sector after months of hardship.

According to TouchStar, at the end of March, 76 per cent of respondents for a Logistics UK survey, reported a general downturn in business and by 3rd April, 69.5 per cent of companies had scaled back or suspended operations. Though many are now reporting an increase in normal supply chain performance, weeks of affected business has in no doubt put a strain on the industry. Whilst it recovers, a continued freeze of fuel duty would help contribute to the recuperation of the sector and ensure that profits do not take any further hits.

Not having to budget for an increased fuel cost, will mean more revenue can be set aside for innovation within businesses, as well as logistics recruitment. Both are important for the future of the sector, with the latter being crucial in targeting the skills gap in logistics.

A freeze will give the industry the chance it needs to get back on track, and to continue servicing the country in the way that it did post, and even during, national lockdown. What are your thoughts? You can interact with us on Twitter and LinkedIn, and remember you can engage with FairFuelUK to help to urge the chancellor to continue with the fuel duty freeze this autumn.