FSB Says Rising Fuel Duty Is Holding Back Small Business Growth
The rise in fuel duty over the last few months is holding back small business growth and the Federation of Small Businesses (FSB) is worried it’s affecting those sectors vital for economic growth.
Over a thousand people replied to the FSB’s Voice of Small Business survey and initial results reveal that rises in fuel duty will have a negative impact on around 79% of small businesses.
According to the results business in the manufacturing, construction and transport industries are severely affected by rising fuel costs. The FSB is worried that despite manufacturing being one of the few sectors showing signs of growth, further increases in fuel prices could start to hit and damage economic recovery.
In the past the FSB has said that the rise in fuel duty will cost small firms as much as £2,000 over the next six months. This is an extra cost on top of their planned outgoings.
The problem is that small businesses find it harder to absorb these additional costs. Consequently, the only way they can deal with these extra costs is by freezing wages, increasing prices or making people redundant.
The FSB is worried that a rise in fuel duty will damage the manufacturing sector which provides £133 billion to the economy and employs around two and half million people. Therefore the FSB wants the Government to think again about the planned 1p a litre rise in fuel duty when the Budget is announced later this week. As well as reversing the planned fuel duty rise, the FSB wants the Government to introduce a fuel duty stabiliser – this would adjust fuel prices when oil prices rise or fall so that petrol remains at a more constant price.
The opposition wants a cut in VAT on fuel but the FSB believes that while a reduction in VAT would cut the price at the pump it won’t help to stop fuel prices rising rapidly, whereas a fuel duty stabiliser would.
There are arguments that a fuel duty stabiliser is too complicated to implement but in a report entitled “A Fuel Duty Stabiliser – is it really that complicated?” the FSB showed that a stabiliser is simple, affordable and environmentally friendly.
A fuel duty stabiliser would mean businesses would be more able to plan ahead because the cost of fuel would be stabilised and businesses would be able to plan for the future and include known fuel costs in their plans.
The Budget will be delivered this week so it remains to be seen what measures George Osborne, the Chancellor, will announce to deal with rising fuel costs and help small businesses.