Fuel Duty Cut in Chancellor’s Spring Statement

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Published: 29 March 2022
Categories: News Article

Cut in fuel duty welcome but misses an opportunity, RHA claims

The RHA has welcomed the Chancellor’s announcement of a 5 pence per litre cut in fuel duty in his Spring Statement, which equates to a £2,000 per year saving on running a typical HGV.

However, it said that while it will ease pressure on businesses facing soaring costs, the government could have gone further and announced an essential user rebate similar to those used in other countries for hauliers and coach operators.

“Cutting fuel duty is a common sense move and will be a boost for the economy, but more could have been done,” RHA executive director Rod McKenzie said.

“The Chancellor missed an opportunity to announce a rebate to relieve more pressure on businesses. We’ll continue to press the government hard for this measure as firms grapple with huge operating cost hikes.”

“Longer term, we believe the government should bring in an essential user fuel rebate for coaches and lorries to bring UK operating costs into line with our key European competitors.”

Unsustainable burden

Added Elizabeth de Jong, Director of Policy at Logistics UK: “With average fuel prices reaching the highest level on record and rising inflation, there has been an unsustainable burden on logistics businesses which operate on very narrow margins of around 1%; the Chancellor’s decision today will help to ensure operators can continue to afford supplying the nation with all the goods it needs, including food, medicine and other essential items.

“Fuel is the single biggest expense incurred by logistics operators, accounting for a third of the annual operating cost of an HGV. The cut in fuel duty of 5ppl will result in an average saving of £2,356 per year per 44-tonne truck; this move will help to strengthen the UK’s supply chain during a time of ongoing financial and operational challenges.”

David Bushnell, director of consultancy and strategy at Fleet Operations said that although the move may be ‘the biggest cut to all fuel duty rates ever’, the industry should not lose sight of the fact that this cost burden has not just arisen following the crisis in Ukraine.

“Average petrol and diesel costs have risen by 33% and 38% respectively in just 12 months, from 124.6p and 129p per litre in March 2021,” he said.

Fleets must find other ways

“Oil price volatility shows few signs of abating and so fleets must find other ways to ease the financial pressure. With the business case for electrification growing ever stronger, fleet fuel strategies should continue to be reviewed, along with cost control measures that can help ease the financial burden – from effective vehicle maintenance and fuel discount structures to more effective mobility management.

“It is also worth noting that the decision since 2010 to freeze fuel duty has led to an increase in emissions of up to 5%, so the fuel duty cut obviously does little to support the UK’s Road to Zero ambitions. The Chancellor may have scrapped VAT on home energy-saving measures such as insulation, solar panels and heat pumps but has offered fleet operators nothing in the way of any new incentives to encourage EV take up which may have helped balance out the CO2 impact of the fuel duty rise.”

Written by Tim Wallace for Motor Transport © 23 March 2022.  Keep up to date with the latest transport news with Motor Transport

Photo credit: Josh Appel on Unsplash

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