News from Bunkercard™
Budget: 'We've been sold a dud' - March,10
Operators budgeting for the 1p/litre fuel hike from this Thursday (1 April) should recalculate as the FTA has highlighted an apparent oversight that actually means the increase is 2p/litre.
Although the Chancellor's staggering of the fuel duty increase appeared to give road transport firms a slight reprieve, what the Chancellor failed to either mention, or just plain forgot, is that with the loss of the 20p/litre duty differential for biodiesel, also from 1 April, operators actually face a hike of 2p/litre from next month.
"We were prepared to give Mr Darling some credit for the decision he announced on fuel duty," says FTA policy director James Hookham, "but what we've discovered on closer inspection is that we've been sold a dud."
"Any cost saving the staggering of the fuel duty rise may have given the logistics sector has been all but swallowed by the loss of the biofuel differential."
Since 2002, the rate of excise on biodiesel has been 20p lower per litre than regular diesel. But in 2008's Budget, the government announced that this differential would cease from April 2010.
With all fuel sold at the pumps having to include a 5% mix of biofuel (under the government's Renewable Transport Fuels Obligation), the loss of the differential will have a knock-on effect on the price operators pay.
The FTA believes the overall increase could stretch to more than 2p/litre due to a problem fuel providers are having with bioethanol.
"We understand that bioethanol is proving difficult for fuel suppliers to put into petrol, so they are putting more bioethanol into diesel instead. This obviously increases the biodiesel blend and could be as high as 7.5% in some cases," explains Hookham.
"The real cost to businesses of the 1 April fuel hike could be as high as 2.5p/litre, which would leave operators no better off and cause forecourt prices to push £1.30p/litre," he adds.
At a glance
Fuel duty increase for 2010 staggered, with an increase of 1p/litre on 1 April, 1p/litre on 1 October and 0.76p/litre on 1 January 2011.
Fuel duty will also rise by 1p/litre on 1 April each year from 2011 to 2014.
Vehicle Excise Duty for HGVs frozen at its current level until the end of 2011.
A £100m fund to repair local roads, following recent cold weather, has been allocated, as well as a £285m investment in the strategic road network to improve capacity.
Reduced Pollution Certificate scheme reintroduced - which gives a £500 annual VED rebate for purchasers of Euro-6 trucks
What do operators think of the proposals?
Ian Baxter, MD, RH Freight:
"This budget represents a missed opportunity to provide support for the road transport industry. While I welcome the phasing in of the 3p fuel duty hike, the fourth rise in 18 months should have been scrapped, not delayed. The proceeds of fuel duty should at least be reinvested in new road infrastructure rather than used to pay the interest on our mounting public-sector debt."
Andrew Palmer, MD, Suttons Group:
"We think that some time after 7 May we are going to see the real Budget. This was just a nod here and a nod there. Clearly there are huge problems that are going to have to be dealt with. We are concerned about inflation and interest rates, particularly as we do a lot of business in dollars."
Fraser Pollock, MD, Pollock (Scotrans):
"It was a bit of a non-event. They aren't going to change it are they? It's still happening, it's just spread over nine months now. They just see it as an easy way of clawing back money. I don't think they are listening to the arguments about decoupling - maybe it would be different if the country's finances weren't in such a mess."
John Stocker, business development director, Acumen Logistics:
"As fuel duty rises it just makes us less competitive to foreign competition all the time. But looking at our business as an SME we are pleased with the measures to help us flourish in a tough economy. We have a contract with the government for recycling services and measures to improve payment terms are very welcome."
Although the Chancellor's staggering of the fuel duty increase appeared to give road transport firms a slight reprieve, what the Chancellor failed to either mention, or just plain forgot, is that with the loss of the 20p/litre duty differential for biodiesel, also from 1 April, operators actually face a hike of 2p/litre from next month.
"We were prepared to give Mr Darling some credit for the decision he announced on fuel duty," says FTA policy director James Hookham, "but what we've discovered on closer inspection is that we've been sold a dud."
"Any cost saving the staggering of the fuel duty rise may have given the logistics sector has been all but swallowed by the loss of the biofuel differential."
Since 2002, the rate of excise on biodiesel has been 20p lower per litre than regular diesel. But in 2008's Budget, the government announced that this differential would cease from April 2010.
With all fuel sold at the pumps having to include a 5% mix of biofuel (under the government's Renewable Transport Fuels Obligation), the loss of the differential will have a knock-on effect on the price operators pay.
The FTA believes the overall increase could stretch to more than 2p/litre due to a problem fuel providers are having with bioethanol.
"We understand that bioethanol is proving difficult for fuel suppliers to put into petrol, so they are putting more bioethanol into diesel instead. This obviously increases the biodiesel blend and could be as high as 7.5% in some cases," explains Hookham.
"The real cost to businesses of the 1 April fuel hike could be as high as 2.5p/litre, which would leave operators no better off and cause forecourt prices to push £1.30p/litre," he adds.
At a glance
Fuel duty increase for 2010 staggered, with an increase of 1p/litre on 1 April, 1p/litre on 1 October and 0.76p/litre on 1 January 2011.
Fuel duty will also rise by 1p/litre on 1 April each year from 2011 to 2014.
Vehicle Excise Duty for HGVs frozen at its current level until the end of 2011.
A £100m fund to repair local roads, following recent cold weather, has been allocated, as well as a £285m investment in the strategic road network to improve capacity.
Reduced Pollution Certificate scheme reintroduced - which gives a £500 annual VED rebate for purchasers of Euro-6 trucks
What do operators think of the proposals?
Ian Baxter, MD, RH Freight:
"This budget represents a missed opportunity to provide support for the road transport industry. While I welcome the phasing in of the 3p fuel duty hike, the fourth rise in 18 months should have been scrapped, not delayed. The proceeds of fuel duty should at least be reinvested in new road infrastructure rather than used to pay the interest on our mounting public-sector debt."
Andrew Palmer, MD, Suttons Group:
"We think that some time after 7 May we are going to see the real Budget. This was just a nod here and a nod there. Clearly there are huge problems that are going to have to be dealt with. We are concerned about inflation and interest rates, particularly as we do a lot of business in dollars."
Fraser Pollock, MD, Pollock (Scotrans):
"It was a bit of a non-event. They aren't going to change it are they? It's still happening, it's just spread over nine months now. They just see it as an easy way of clawing back money. I don't think they are listening to the arguments about decoupling - maybe it would be different if the country's finances weren't in such a mess."
John Stocker, business development director, Acumen Logistics:
"As fuel duty rises it just makes us less competitive to foreign competition all the time. But looking at our business as an SME we are pleased with the measures to help us flourish in a tough economy. We have a contract with the government for recycling services and measures to improve payment terms are very welcome."
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