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Pre-Budget wish-list

Date: 06 December 2006

Gordon Brown

Is everyone asking the Chancellor for a freeze on fuel duty this Christmas? Find out what the industry wants from today's Pre-Budget statement.


The BVRLA's main submission was on business car allowances. What we're asking for is an announcement that will reset the writing down allowances so that for the first year, the allowance will be based on the car's CO2 (the less CO2 the greater the allowance) and for years two and three the car is placed in a general pool and the pool itself is written down. It'll save a lot of individual calculations and thus reduce costs for the industry.

In addition, we've asked for the removal of the rental disallowance for cars costing more than £12k. Currently, there's a sliding scale whereby the more expensive the car the greater the amount of rental that you cannot offset in your accounts. This, unlike the writing down allowance, is a permanent restriction and inveighs unfairly against leasing for more expensive cars costing over say, £25k. With its removal, leasing will become yet more attractive.

Timing we hope, will be an announcement in PBR, details in Budget, intro in Sept next year with plate change.

We've also asked for multi-year VED so that when we write a contract for three years say, we can buy at the outset VED for that period. IT would save the admin of receiving annual reminders, re-licensing, receiving and then sending out thousands of tax discs.


There is a need for overall stability for the taxation of the sector, a minimum of three years' notice of any proposals to change the system to any extent; and full three-year notice of the starting point for CO2 (ie announce the 2009/10 figure (hopefully still at 135 g/km) no later than Budget (Mar 07).

Early announcement of results of HMRC review of ECOPs - to remove uncertainty hanging over the market.

No back-dating, in the event of a significant hike in VED rates for higher emitters.

Implementation of a complete review of the whole AMAPs system, since the current single-tier system is not coping with the huge diversity of circumstances which it covers.

Faster response to forecourt activities to be reflected in the Advisory Fuel Rates - perhaps a quarterly scale review, instead of changing when fuel prices move more than 10% from calculation base.

Freight Transport Association

The Chancellor of the Exchequer must resist any temptation to increase fuel duty when he delivers his Pre-Budget Report on 6 December. Despite a recent fall in the world price of oil, the present level, at $58 to $60 a barrel, is broadly where it was in August 2005 when he took the welcome decision that prices were then too high to justify an increase in fuel duty and opted not to so do. Less than 18 months later that situation is unchanged and he should adopt the same realistic policy.

The Chancellor's decision to postpone the inflation-linked increase in diesel duty planned for 1 September, because of the high and volatile world oil price, was very welcome - prices then peaked at $78 a barrel. Although those prices have, thankfully, now fallen back they remain relatively high and there is no guarantee that they will not rise again.

UK road transport is obliged to pay the highest rate of fuel duty in Europe at 47.1p per litre duty on diesel. This compares with an average for the rest of Europe of just 22p per litre.

With diesel constituting about a third of the running costs of a heavy goods vehicle, and with some high mileage individual vehicles contributing road taxation of up to £30,000 per year, then these high prices are a very real problem which any increase in fuel duty could only worsen.

Our ultra high rate of duty produces a competitive disadvantage - UK road transport costs are 5% higher than Holland, 10% higher than France, Spain and Italy, and 20% higher than Eastern European countries. Only German and Irish haulier costs are similar to the UK.

The Chancellor must not use the fact that world oil prices in December are cheaper than was the case in August as an excuse to raise fuel duty and to further disadvantage the UK road transport industry. A fuel duty increase at this time would simply make the precarious financial position of UK haulage worse.

Retail Motor Industry Federation

Fuel prices and fuel tax

The current high price of oil on world markets is combined in the UK with high duty levels on petrol and diesel. The Chancellor's decision in 2005 to freeze duty on road diesel and petrol was welcomed by industry but as fuel prices continue to rise we believe the Government needs to go further. Despite the calls by the environmental lobby to raise taxes we strongly believe that such action would have serious national economic consequences.

Investment incentives

The development of Bio-fuels is increasing and will slowly become more widely available in the coming years. No financial incentives are currently available to petrol retailers to invest in parallel fuel availability i.e. bio fuels. Retailers will have to continue to sell existing products and will have to develop new systems in parallel. Financial incentives are imperative if the provision of these new fuels is to be made readily in forecourts across the UK.

Road user charging

Road pricing must not be used as yet another tax income stream disguised as a contribution to the environment. Reducing the cost of road congestion is essential. Although road pricing is an acceptable mechanism to manage the road network it should form part of a coordinated package of measures to alleviate congestion and improve the transport network. Motorists must be protected against excessive charges set by governments, central and local, to raise money. Charges must be seen to be fair. The estimated £9 billion revenue that may be raised from road pricing must be reinvested into the transport network. Any road user-charging package must include a substantial increase in road investment and provide additional funds for public transport. It should be revenue neutral and not be used as a stealth tax on motoring.

Fuel Duty Point

Petrol retailers are required to pay the duty on the fuels they receive from the oil companies the moment it is delivered into their tanks. In other words, they pay tax on fuel before it is even sold. Oil companies are allowed a period of sixty days before they meet the same tax demand. Clearly the small business is severely discriminated against on this issue and the point at which the duty is paid must be altered to give greater support to the retailer.

British Chambers of Commerce

The pre-Budget Report submission of the British Chambers of Commerce focuses on urging the Chancellor to create the right infrastructure to allow the UK to remain competitive on a global scale.

Small and medium sized businesses account for a significant proportion of foreign trade yet they are feeling the pinch due to high tax levels and the ever upwards creep of red tape and regulation. In addition they are suffering because of a crumbling transport infrastructure and education system that does not properly prepare school leavers to achieve in the global market place.

The pre-Budget report submission highlights four policy areas that are crucial for the Government to focus upon to provide the right climate for business.


The priority is still for a lower tax burden and a simpler tax system. In particular:

  • The UK's corporate tax rate of 30 per cent needs to be brought into line with the EU average of around 25 per cent.
  • National Insurance needs to be significantly reformed.
  • Rules relating to NI should be aligned with those that govern PAYE income tax and placed on a cumulative basis.


Roads. Strategic roads need to be identified and then improved to a uniform specification - e.g. remove pinch points and the improvement of intersections

Rail. The development of strategic rail freight terminals is essential if the Government is to maximise the opportunity for freight to be undertaken by road.

Air. The Aviation White Paper should be implemented in full. Air capacity must be substantially increased, both in the South East and across the regions to respond to current and future demands.

Forum of Private Businesses

The FPB, which represents around 25,000 small and medium-sized firms in the UK, wants a number of areas to be addressed by the Chancellor. They include: lightening the tax and red tape burden, slowing the increase in the National Minimum Wage, giving a percentage of government contracts to small firms and a shift of emphasis in education to reflect the needs of smaller businesses.

The FPB's Chief Executive, Nick Goulding, said the wish list would promote productivity, competitiveness and employment for the UK economy: "It's clear that Mr Brown has work to do to win round owners of smaller businesses who are frustrated at having their profitability and growth restricted by a government that does not listen to them."