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Budget delivers austerity measures

  • 22 June 2010
  • By Dominic Perry

In an emergency budget billed as the "unavoidable budget", Chancellor George Osborne delivered a package of measures designed to cut Britain's soaring national debt.

There was precious little announced directly for the road transport industry, with fuel duty meriting the briefest of mentions as Osborne promised no new fuel duty increases.

However, according to both the Road Haulage Association (RHA) and the Freight Transport Association (FTA) the proposed rises of 1p/litre on 1 October and 0.76p/litre on 1 January 2011, announced by Alistair Darling in his March budget, will still go ahead.

The price of fuel will also increase thanks to the Chancellor's announcement of a 2.5% rise in VAT to 20% from 4 January 2011.

He also said that he was examining the potential for the introduction of a fuel price stabiliser, with a report due after the summer. Discounted fuel duty in remote rural areas will also be investigated, with a potential trial in Scotland.

With a spending review of planned infrastructure projects due to report in the autumn, the Chancellor said that it would only go ahead with schemes that deliver "significant economic return to the country".

Reaction from the RHA was much as expected. Chief executive Geoff Dunning said he was disappointed by the decision to press ahead with the future fuel duty rises.

He adds: "It will simply further widen the gap between UK diesel duty and that of our EU competitors, the unfairness of which was acknowledged in the Coalition's recent programme for Government."

However, it welcomed the investigation into the fuel price stabiliser and the reduction of small business tax to 20% from next year.

"We are concerned about the reduction of the investment allowance for small firms to £25,000 from £50,000, which will have a detrimental impact small haulage companies," adds Dunning.

Other points contained in the budget include:

- Proposals to reform the Climate Change Levy will be published in the autumn.

- More details on the Green Investment Bank will emerge after the autumn Spending Review.

- The Budget confirms the establishment of Infrastructure UK to improve long-term planning and delivery, and to enable greater private sector investment in infrastructure. The national infrastructure plan will be announced in the autumn.

- Corporation tax will be cut by 1% each year for four years to 24%.

- A new scheme to encourage growth in the regions - outside London, the South-East and East of England - where a new business will be exempt from up to £5k of employer NI payments for the first 10 employees hired.

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