Scrap fuel tax hike before it’s too late

Businesses across the Fylde coast are calling for a planned hike in fuel duty to be scrapped. . . before it's too late.
Businesses across the Fylde coast are calling for a planned hike in fuel duty to be scrapped. . . before it's too late.
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BUSINESSES across the Fylde coast are calling for a planned hike in fuel duty to be scrapped. . . before it’s too late.

Fears are growing firms will have to lay off staff, freeze wages and reduce investment if the Government does not have a change of heart ahead of next week’s Budget.

Chancellor George Osbourne is now under massive pressure to scrap the fuel duty ‘escalator’ – the system which sets fuel duty increases at 1p more than inflation.

That could mean a rise of around 5p a litre come April 1.

The feared £1.50 per litre is just around the corner, experts predict, compounded by the new higher rate of VAT which added 3p to a litre earlier in the year.

Steve Pye, chairman of Blackpool, Fylde and Wyre’s Federation of Small Businesses says businesses cannot cope with the increase.

He said: “We are calling on the Government to reverse the planned rise and are urging it to introduce a fuel duty stabiliser – a mechanism to adjust fuel prices and alleviate the impact of oil price rise shocks on pump prices.

“Unlike big businesses, small firms are unable to absorb the cost, and so to deal with the extra expenses they have to increase prices, lay off staff and freeze wages.

“Research shows the hike in fuel duty will cost small firms up to £2,000 over the next six months, on top of regular outgoings.”

The UK has the second highest diesel price in Europe where the average litre of diesel is made up of 51 per cent product price and 49 per cent tax. In the UK the average is 38 per cent product price and 62 per cent tax.

The escalator was brought in by the previous Labour Government to help curb pollution, traffic levels and congestion. But it is set to hit business and private drivers hard.

Bob Whinn-Tulip, office manager at Tony Scott Haulage in Blackpool, said staff were already working on reduced hours.

He said: “We can’t cover the rise in petrol duty by charging our customers more so we will have to cover the deficit ourselves.

“I think it’s a worrying time for the haulage industry, just a penny increase will add thousands to fuel bills a day.”

Craig Smith, of E.V.T.S haulage in Poulton, added: “We have weathered the storm but a lot of haulage companies are closing.

“Any increase will have a huge effect on us. At the moment we are having to pick and choose the work we do to watch our costs.

“We spend £15,000 a week in fuel, and that will rise dramatically unless Mr Osbourne decides to do us a favour in the budget.”

Garage owners fear the worst if the Government does not act.

Mustak Adam, manager of Corton Beach Filling Station on Central Drive, Blackpool, says he is offering a ‘service’ but not making profit.

He believes if fuel duty is increased independent petrol stations will close down.

He said: “I cannot continue as I am, I make no profit but have staff to pay and a family to feed.

“We have tried to keep the costs to our customers down but we cannot sell for less than we buy.

“I’m already struggling to compete with Asda and Morrisons.

“If I could sell up tomorrow I would but I can’t because I won’t make any money.

“I am open 24 hours to compete with the bigger stores but I may have to work more hours myself and lose staff.”

Bill Lewtas, of Blackpool Licensed Taxi Association said: “We support the scrapping of the rise in fuel duty and are obviously worried about rising fuel costs.

“We haven’t had a fare increase since 2008 and we have had to absorb the rising costs of fuel.”

MPs yesterday rejected a Labour bid to get the Government to reverse the VAT rise on petrol.

Mark Menzies MP for Fylde said: “Fuel prices are having an impact on almost every section of society.

“This is an extremely difficult issue but the Government is now looking at a fair fuel stabiliser and a fuel duty discount for remote rural areas which could help.”