PRA urges chancellor to continue fuel duty freeze in Budget
Petrol retailers’ chief Brian Madderson has called on the chancellor to “keep fuel duty down” in this month’s Budget. Five years ago, the chancellor froze fuel duty, a move the PRA said led to “more goods being purchased and more people being hired.” The PRA has long lobbied for either frozen or reduced fuel duty on the basis that this helps to increase business and consumer spending.
“The chancellor must keep duty down following the extraordinary rise in wholesale cost of fuel that we have seen in recent weeks,” said the chairman of the Petrol Retailers Association Brian Madderson.
“Motorists and businesses should expect a rapid rise in pump prices in the days ahead of around 5p per litre. The Chancellor should heed his own words about putting fuel in the tank of the British economy.”
The Treasury published a paper in 2014 that proved that the additional spending generated more income tax and VAT than would have ever been raised by letting fuel duty rise. The study said retailers and transport firms used the savings to expand their businesses, while households increase spending on other services.
Madderson continued, “I trust he is listening to the Treasury officials who argued in 2014 that the short term gains that have been measured since the freeze was put into place will extend for decades, boosting GDP to higher levels than previously estimated.
“Fuel duty and VAT already represent around 75 per cent of the average pump price purchase. A duty increase could take us back to the days of the haulage industry’s fuel supply blockades.”
City analysts are forecasting further weakening of the pound to as low as 1.20 versus the US dollar in the months ahead as financial institutions worry over a Brexit vote in June. This would add another 3ppl to pump prices.
“If the chancellor increases fuel duty by 2ppl next week as some officials have hinted, then the impact on our economic recovery and inflation will be further magnified. This would be massive blow to country as the overall effect could be a dramatic rise by as much as 10p per litre by the summer,” Madderson concluded.