UK courier firms disappointed as fuel duty set to increase further
The UK’s Budget announcement has left delivery companies disappointed, with Chancellor George Osbourne maintaining plans to increase fuel tax from August, despite the UK having one of the highest fuel prices in Europe. Predicting “subdued but positive growth” in the UK economy for the next 12 months, the government insisted its new Budget was about protecting the economy “in this period of global uncertainty”.
The Budget recognised that a 40% increase in oil prices between 2010 and 2011, with prices remaining at record levels, had weight heavy on business operating costs. But, the government made no changes to previously planned 3p increase on a litre of petrol set to take effect this summer.
The price of fuel has risen 20% in the last two years, and is expected to see the price of diesel reaching GBP 1.50 per litre this week (the equivalent of $9 USD per US gallon) – more than twice the diesel prices seen in the United States at the moment.
Among the changes within the UK’s Budget, vehicle excise duty rates will increase in line with the retail price index from next month, while rates for heavy vehicles will be frozen.
Corporation tax will be lowered by two percentage points from next month to 24%, followed by a further point reduction in the subsequent two years, giving the UK one of the lowest corporation taxes in the G20 nations.
“Crippling”
Parcel and express delivery companies welcomed the freeze in vehicle excise duty today, but warned of continued difficulties from the ongoing increases in fuel prices, which the Budget did not seek to alleviate with a change in fuel tax.
Jon Tobbell, commercial director at Leeds-based home delivery specialists Hermes UK, said his company had seen its fuel costs rise 30% to more than GBP 10m a year.
“It has been impossible to manage this additional overhead without passing on additional costs to our customers,” he said. “The failure to suspend the planned increase in fuel duty is a disaster for the haulage sector and a disaster for consumers who will ultimately experience price rises as a result.”
Patrick Gallagher, the chief executive at London-based same-day delivery company CitySprint, said UK businesses relied on courier firms like his to keep operations moving, and cannot afford the financial burdens of higher fuel duty.
“The UK remains the most expensive place in the EU for fuel – and most of that cost is duty,” he said.
“Crippling fuel prices are hard for businesses and households to absorb. For those in the courier industry in particular, they add considerable pressure to the cost base.”
Elsewhere in the Budget, As the government moved to reduce income taxes for the highest earners from next month, it also moved to close loopholes allowing tax avoidance. Reforms to VAT loopholes included an end to the Low Value Consignment Relief system that has fostered a fulfillment industry in the Channel Islands.
The government said it would look at new ownership models for the national road network as part of a new national roads strategy, which could pave the way for the privatisation of some major highways.
And, the Budget confirmed today that Royal Mail’s GBP 28bn pension plan would be transferred to the government ahead of an eventual move to privatise the company.
