Budget 2017

Budget requests: Don’t ditch diesel or lift beer tax

By Michael Stones

- Last updated on GMT

The chancellor has been urged not to ditch diesel in his budget this week
The chancellor has been urged not to ditch diesel in his budget this week

Related tags Fuel duty Minimum wage

The Chancellor Philip Hammond has been urged to avoid “ditching diesel” or lifting beer tax in his first budget to be delivered on Wednesday (March 8).

Fuel duty represented 61.4% of the cost of a litre of bulk diesel (excluding VAT), according to the Freight Transport Association. Even a 1p rise in fuel duty in the budget would have a significant impact on businesses’ operating costs, it warned.

“Fuel costs now represent a third of the total cost of the operation of an articulated lorry, and the annual fuel bill for a 44t vehicle has risen by 39% since January 2007,” ​said its deputy chief executive James Hookham.

‘Passed on to customers’

“Additional increases in fuel costs would need to be passed on to customers by UK operators, which could mean the death knell for new trading partnerships and continued growth for the UK at a time, pre-Brexit, when the country’s trade needs as much stimulus as possible.”

The FTA urged the chancellor to at least honour the pledge made In the Autumn Statement last November to  freeze fuel duty for 2017/18.

But if the government was serious about boosting UK trade, it should cut fuel duty by 3p per litre. “Our estimates show that this would deliver around £1,400 annual saving on the running cost of a 44t truck, which would make UK freight and logistics operators increasingly competitive in a global trading market,” ​said Hookham.

‘No pot of gold’

Meanwhile, the British Beer & Pub Association (BBPA) has warned the chancellor there was “no ‘pot of gold’ in raising beer taxes”.

Any return to beer tax hikes would be a major setback for brewers and pubs, the BBPA warned.

Many pubs were struggling with rocketing business rates and other new costs this year, from the National Minimum Wage, auto-enrolment for pensions and the Apprenticeship Levy, claimed the association. 

All four were said to add the equivalent of 5.3p tax on a pint, regardless of any possible beer duty increases.

BBPA chief executive Brigid Simmonds said: “Our beer taxes are already three times the EU average, and pubs face big new cost challenges this year.

“British beer sales have stablised since the abandonment of huge tax rises led to huge sales losses under the beer duty escalator. Any return to tax hikes would be a massive setback for the industry and the 900,000 people we employ.

 “Instead, by continuing the sensible tax policy begun in 2013, the chancellor can create confidence in this important sector, and bring cheer to pubgoers – and all at virtually no cost to the Treasury.”

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