FairFuelUK (FFUK) has warned chancellor George Osborne that ending the five-year freeze on fuel duty in the Budget this Wednesday (16 March) would slow down UK economic growth.
The campaign group fears that fuel duty is seen as a soft target for additional tax revenue by the chancellor who is faced with an £18bn black hole in the public finances and a potential debt overshoot of £50bn by 2020.
In the absence of a duty announcement during last year's autumn statement, the Office of Budget responsibility calculated that fuel duty would rise each year, from the end of the freeze in April, in line with the Retail Price Index (RPI). This is based on the assumption of a return to standard government policy to uprate duties inline with inflation.
FFUK called on Osborne to cut fuel duty by 3ppl in the Budget in order to boost economic growth and make the UK’s transport industry more competitive by bringing UK fuel duty closer to EU levels.
The group warns that a 2% rise in fuel duty will take £8bn out of consumer spending in this parliament, reducing tax revenue.
Howard Cox, FFUK founder, said: "Any opportunistic increase in fuel duty will set the economy back significantly.
“Our evidence against a duty hike is incontrovertible. It’s time for the UK to fall in-line with the average level of fuel taxation across the EU. Trust in the consumers to spend, don’t use them just as wallets on wheels.”
Quentin Willson, FFUK spokesman, said: “Osborne absolutely knows full well that there is little risk in cutting duty and unquestionably no risk to economic growth in maintaining the freeze in the lifetime of this Parliament. He ignores our first-hand evidence at his peril and if he pushes up duty it shows contempt for the electorate simply for a fast buck.”
RHA called on the chancellor to “hold his nerve” on fuel duty this week, or risk “slamming the brakes” on the UK’s economic recovery.
Chief executive Richard Burnett said: “UK fuel duty is by far the highest anywhere in the EU. It is double of that which some of our competitors pay, and a 2ppl increase will add nearly £1,000 a year to the cost of operating a truck and that will inevitably have to be passed onto consumers.”
