Treasury Told 'Cut Fuel Duty To Create Jobs'

Road hauliers and motoring groups have told the Government that cutting fuel duty would boost the UK economy by creating many thousands of jobs.

Campaigners from Fair Fuel UK - who are backed by the RAC, the Road Haulage Association and the Freight Transport Association - have held emergency talks with ministers in a last-ditch attempt to stop another fuel duty rise.

Chancellor George Osborne has indicated he will approve the 3p rise in duty in his budget next month, taking it from 57.95 pence per litre (ppl) to 60.95ppl from August.

But Fair Fuel UK has presented a report to Treasury Minister Chloe Smith claiming a cut in fuel duty would be better for the economy.

It says a cut in fuel duty will effectively give the Chancellor more money, rather than less, through gains in income tax, a boost to business and consumer spending in other areas.

A cut of 2.5p per litre would create 180,000 jobs in the first year, at no net tax loss, and boost GDP by 0.33%, the report, conducted for the campaign group by the Centre for Economics and Business Research, shows.

It says a bolder 5p cut, which would cost the Exchequer around £1bn, would be likely to be offset by intangible benefits of increased confidence and create another 30,000 jobs.

National spokesman for Fair Fuel UK Quentin Willson said: "We've been saying this all along and now we can prove it.

"This conclusively backs up our claim that a cut in fuel duty will boost the economy without harming Treasury revenues.

"Quite rightly, the Chancellor's priority is on stimulating growth in order to pay down the deficit. Here is a way to do both."

He went on: "The Government now needs to embrace these findings and follow through on the 1p cut they made last year."

The meeting follows other figures obtained by Tory MP Philip Davies indicating that, in Britain, taxes and duties account for 60% of the price of petrol and 58% for diesel.

These figures are far higher than for the rest of the EU, where Cyprus has the lowest figure for petrol (at 43% of the total) and Luxembourg the lowest for diesel (38%).

Warning that the increase is hurting everyone, the general secretary of the Licensed Taxi Drivers Association, Steve McNamara, said: "The price of fuel is crippling the country. My members are suffering.

"We have no choice but to put fares up which makes it more expensive for our customers.

"It is a no-win situation for everyone except the Government."

The cost of diesel in Britain has reached 145ppl in some places - and petrol has broken the peak set during the Arab Spring uprisings last May, at 137.43ppl.

As prices rise by 1p a fortnight, Rob Wilcox, the managing director at Massey Wilcox hauliers, says profit margins are being affected.

He said: "If I run one of my lorries in Europe (Chicago Options: ^REURUSD - news) it costs me £100 a week less than it does here and I'm spending 40-50% of my costs on fuel and it's changing every week."

Haulier James Wilkinson spends £45,000 a month filling his fleet of 24 lorries with diesel compared to £30,000 just three years ago.

He said he has already made redundancies and bought more fuel efficient vehicles but costs continue to rise at his Manchester (Frankfurt: A0ETDJ - news) -based firm.

"We need to take a hard line which means we pass all of these extra costs onto our customers. This is what we have to do to survive," he told Sky News.

The AA pointed out that February's extra day because of the leap year will bring in an additional £56.3m in fuel duty revenue.

The car breakdown service said this gives Mr Osborne greater scope not to press ahead with the increase in fuel duty.

But the Government has said there is no money left in the budget for a u-turn and that scrapping it would cost £1.5bn.

Mr Osborne told Sky News exclusively at the weekend he had already made concessions in his last two fiscal statements meaning the duty was 6p less than it should have been.

The meeting between the Treasury and Fair Fuel UK came as the Unite union said thousands of tanker drivers who deliver fuel to petrol forecourts are to be balloted for strikes in a row over safety and terms and conditions.

The union warned that strikes could hit petrol supplies at supermarkets, garages and airports across the country.

Voting will start next week among 2,000 drivers, who account for 90% of those supplying petrol to UK forecourts.