Alternatives are available to additional fuel cost pressures

This week I had the opportunity to meet with the Governor of the Bank of England. We discussed the criticality of the road transport sector (HGVs, LGVs and Coaches) to the UK economy and to the daily lives of people across this nation. During the conversation, we discussed the challenges our sector will face over the next five years, including the rising cost pressures placed on operators.

Over the next couple of weeks, we’ll be outlining our asks of the Chancellor ahead of her Budget on 30 October.

We’re clear that the Government has a huge task ahead in their mission to drive forward economic growth in the years to come. As an economic enabler, our industry is central to their mission, and we’ll continue to work collaboratively with ministers to play our part. In our recently published Blueprint, we set out some key recommendations to kick-start that growth.

Running a business is becoming more expensive year on year and our sector is under considerable strain with record numbers (almost 500) hauliers going out of business last year, and regrettably, over 250 to date this year with higher operating costs and lower volumes a regular feature in the daily life of operators.

While fuel prices have decreased slightly this month, they continue to put a massive strain on budgets and are still amongst the highest in Europe. With margins tight and the cost of new vehicles and of vehicle maintenance rising too, the last thing businesses need is a rise in fuel duty.

Every effort must be made to help a sector which is crucial to the supply-chain and economic health of this country.

Take the price of fuel. Fuel costs represent a considerable amount of turnover, amounting to around 31-36% of running costs for the average fleet (44 tonne vehicle). Hauliers face a competitive disadvantage across the European market too as diesel prices remain significantly higher here than in most European nations. Many in our sector operate on low margins, tied into contracts with local authorities which often don't reflect the reality of the increases in fuel and energy costs we've seen in recent years.

We are proposing sensible measures the Government could adopt to support our industry, relieve pressure on businesses and deliver wider benefits across the economy.

For a start, an essential user rebate would take 15 pence per litre off the cost of fuel for commercial vehicles. This would provide significant support to hauliers and coach operators and would bring UK fuel duty levels closer to those across Europe, making British businesses more competitive.

We urge the Chancellor to announce a fuel duty rebate linked to emissions reduction to incentivise low-carbon fuels uptake. We want the Government to look towards low-carbon options like hydrotreated vegetable oil (HVO), compressed natural gas (CNG) and liquid natural gas (LNG). This would speed up decarbonisation and offer an interim solution reducing emissions from fleets by up to 90 percent. We also believe these fuels should be exempt from clean air zone charges and other penalties.

Our proposals offer bold and positive measures which would ease pressures and show early on that this Government supports an industry which is critical to the supply chain. The Government has some difficult decisions ahead and we’re ready to work alongside them to drive forward the growth the country needs.

These are difficult times for many in our industry. Alongside rising expenses, there are other factors at play too with skills gaps and a need for more technicians and drivers, with the average age of drivers increasing.

We’re clear that additional cost pressures right now would be devastating for many businesses.

Our recommendations offer benefits that would be felt beyond our industry and would help the Government in their mission to drive growth. Our industry is central to that growth.

More on fuel duty and other measures we recommend in our Mission Driven: A Blueprint for Delivery HERE