PRA says Chancellor ‘warming’ to fuel duty cut

PRA says Chancellor ‘warming’ to fuel duty cut

The Chancellor of the Exchequer is “warming to the idea” of cutting fuel duty in the forthcoming Autumn Statement, according to the head of an influential petrol retailers group.

Chairman of the Petrol Retailers Association (PRA), Brian Madderson, made the assertion after meeting Treasury officials in mid-November.

Mr Madderson said he now “trusts the Chancellor is warming to the idea of a fuel duty cut and that his Autumn Statement will set the economy on the road to prosperity”.

The Autumn Statement is scheduled for Wednesday 23 November. Many political observers have predicted only a fuel duty freeze would feature in the fiscal statement.

The meeting followed a letter from the PRA to Chancellor Philip Hammond calling for fuel tax cuts, saying it would provide a “reassuring boost to businesses and consumers alike”.

The PRA’s letter said forecourt bosses are facing challenges from a weaker pound and stronger oil price. Meanwhile, consumers with more money in their pockets are needed to keep the economy resilient, the group said.

“As I write, the pound is down 27 cents on the dollar on the year, and the price of a barrel of Brent crude is up 4% on the year,” Mr Madderson said.

“Pump prices are hitting consumers hard, resulting in an estimated £5 billion reduced spend by consumers on an annualised basis. Average pump prices are 117 pence per litre today compared to 114 pence in January 2016.”

The letter goes on to state the Treasury is enjoying a duty windfall from petrol and diesel sales this year.

Brian Madderson
Brian Madderson

According to the AA, rising prices at the pumps has generated an extra £25 million a month for Government coffers. The PRA believes the figure could be closer to £1 billion for the year.

“The very rapid growth of online deliveries is one of the cornerstones of the UK’s economic improvement,” the PRA chief said. “Road usage by Light Goods Vehicles rose by a staggering 6.3% in 2015.”

Mr Madderson also suggested the Treasury could collect another £1 billion in revenue by increasing fuel duty for long haul hauliers.  He said foreign and returning UK hauliers are filling up on the continent as diesel duty is up to 30% lower in Belgium and Luxembourg.

“Lower fuel prices in the UK would mean more money comes to the UK Treasury. The Border Force and DVSA could be given powers to fine lorries found to be overloaded with fuel, beyond say 300 litres.”