3p fuel duty increase only frozen, but still hugely welcome for SMEs

But for now, like virtually everybody else the length and breadth of the country, we welcome the decision. The economy is hobbling along in a state of paralysis. Consumers are not spending, banks are not lending, and businesses are really feeling the pinch.

These are unprecedented times, and what the nation really didn’t need was an increase in fuel duty – and a big one at that – to further reduce consumer spending and confidence.

Fuel tax robs consumers of spending power, and with household budgets at their most stretched for a generation, any increase would have been economic and political madness. Quite frankly, this is possibly the best news for SMEs since the Budget.

High fuel prices affect everyone – it’s not just motorists who benefit which some in the green lobby would have us all believe. All goods have to be transported to get from producer to consumer. So higher pump prices mean high shelf prices in the supermarket, the meal out costs that bit more, the couple of day trips to the seaside with the family might have to become just one or even none.

Food inflation over the past three years has been largely driven by high fuel prices, but literally anything and everything that can be purchased in a shop are affected by high petrol prices. Make no bones about it, fuel duty affects everyone, everywhere, and all sectors.

Fuel prices here in the UK, however, remain stubbornly high. Even without the 3p increase, fuel duty here is among the highest in Europe. For example, in France diesel costs around £1.12 a litre. In Spain it’s even less. So we shouldn’t get too carried away with yesterday’s news – this isn’t a cut of 3p, merely a freeze.

What we would like to see introduced is a fuel duty stabiliser. This is something we have campaigned for but has thus far fallen on deaf ears in the corridors of power.

A fuel duty stabiliser mean consistency. Duty would fall when crude oil prices are high, but rise when world oil prices have drop. Not only would this mean a fairer price for everyone, but it would allow businesses which are particularly reliant on fuel, such as hauliers, to plan for the future by knowing that the price of a litre will roughly be the same. Their business would not then be at the mercy of commodity brokers speculating over the price of a barrel of oil.

This has to be the only sensible way forward. Spiking oil prices, as we have seen over the last year, can really damage our economy, and ours needs all the help it can get at the moment.