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RHA cautious over Cameron fuel duty stabiliser hints

The Road Haulage Association (RHA) and the Freight Transport Association (FTA) have urged caution over remarks made by Prime Minister David Cameron that indicate that the Treasury is looking into a fuel duty stabiliser.

Cameron is reported as saying that he is "working with the Treasury" on a way to share the burden of rising fuel prices following a spike in the price of bulk diesel in December.

"We are looking at it. It's not simple, it's not an easy thing to put in place but I would like to try and find some way of sharing the risk of higher fuel prices with the consumer," he told the BBC on Wednesday night.

The Treasury would not comment on the Prime Minister's remarks.

Jack Semple, policy director at the RHA, says: "We would welcome any mechanism to stabilise the price of diesel but we are mindful of the report last autumn from the Office for Budget Responsibility [OBR] that pointed out to the government that it would find it too difficult."

In September last year the OBR said that any tax revenue rises derived as a result of a rise in fuel prices would be offset by a fall in demand for fuel and for goods and services in the wider economy.

Semple argues: "The volatility of the price of fuel has an impact on cash flow and is a major issue for SMEs in the transport industry.

"It is also vitally important that customers have to recognise that these increased costs have to be reflected in haulage rates."

Simon Chapman, chief economist at the FTA, adds: "With diesel prices having risen by 13 pence per litre in the last twelve months, the Prime Minister's assurance that a fuel price stabiliser is still on the government's radar is reassuring.

"However, the fiscal case for introducing it has yet to be established. The OBR's report into such a mechanism, which was published in September 2010, failed to make the numbers stack up."