The chief executive of a Wolverhampton logistics company says government support for hauliers is urgently needed in the face of spiralling fuel costs and will be the difference between them making and losing money.
Pallet-Track’s Caroline Green has called for a cut to fuel duty and a delay in the introduction of the new red diesel rules in the midst of record prices at the pumps, which has seen the average cost of a litre of diesel hit £1.70.
Caroline said the huge increase in VAT collected by the government driven by the rise in fuel prices meant there was flexibility for a duty cut – and that it was already “too high” at 57.95p per litre.
Caroline’s comments come as the Association of Pallet Networks (APN) called for a fuel duty freeze and a pause on VAT on fuel for hauliers; while the Road Haulage Association (RHA) said fuel duty needed to be frozen for two years and the red diesel rule changes delayed by 12 months.
Caroline said: “Hauliers are already having serious problems and are likely to see even more costs increase. And with the rise in fuel prices, the amount you pay in VAT keeps going up and up and into the government’s back pocket.
“The duty is 57.95p per litre at the moment – yes, it might be frozen, but it is already too high!
“If net diesel prices are £1.45 per litre and were 80p pre-pandemic, that means VAT has gone up from 16p to 29p on every litre sold – a huge uplift which goes straight to the government.
“As ‘Joe Public’ we know how much a rise in the cost of fuel hurts us. If you are a haulier travelling from Scotland to England, it could be the difference between making money and losing money on your trip.
“Fuel is typically a third of a haulier’s costs. Then you factor in labour costs, which have gone up between 20 and 30 per cent, plus HGV costs have gone up – it’s layering up costs, like a double whammy on top of a double whammy.”
Caroline said the government needed to look at support with a real impact on hauliers’ bottom lines, in the same way the VAT cut had a big impact on the hospitality industry as it recovered from the pandemic.
“We really need the government to take notice of where we are as a sector. If you look at the hospitality industry, it has recovered well because it had a VAT reduction and that helped encourage people to go back out,” she said.
“Haulier work is all business to business, so this is much less appropriate to us. Businesses can reclaim VAT paid on company purchases, so it helps with cashflow but little else.
“For hauliers, a VAT cut is essentially irrelevant. We need help which will have a much more direct impact.”
Caroline said the April 1 change on the red diesel law should also be paused for up to two years – or ideally for good.
She said: “This is three weeks away and is going to be a big problem.
“It changes the cost base for hauliers and at a time when fuel prices are so high, it means the risk of theft of white diesel goes through the roof.
“However, it’s totally within the gift of the government to delay this change – or forget it altogether.”