Pressure for government action over fuel costs increased yesterday as the freight industry pressed the Chancellor for tax changes and Britain’s biggest manufacturing group prepared to revise down growth forecasts.

The Freight Transport Association (FTA) wrote to Alistair Darling calling for a reversal of the 2p duty increase that was imposed last month and for different tax treatments for industry and private motorists.

Representatives of Scottish hauliers also met yesterday to demand a cut in duty, amid warnings that sentiment among road transport business owners was similar to 2000, when they staged a series of disruptive fuel protests.

Andrew Haines, the FTA president, wrote to Mr Darling giving warning that feelings were running high among hauliers, who have seen fuel costs soar while Britain taxes petrol and diesel more highly than the rest of Europe.

He wrote: “Against a persistent and growing discontent amongst FTA members following the recent duty increase, I am concerned that there is a perception that the democratic and consultative process with Government has been exhausted and that further discussions are now seen as futile or at worst a stalling tactic.

“This is an unhealthy situation for us both to be in as it removes any options for those, like FTA, who are opposed to direct action as a means of resolving this issue.”

The FTA wants different tax rates for industrial use compared with domestic motoring and is discussing with outside advisers how this could be implemented. It believes that this could be done through accounting procedures rather than on the garage forecourt.

Britain imposes a 50p duty charge per litre of diesel, compared with a European average of 23p. The FTA said that this is encouraging foreign hauliers to come to Britain with full tanks of fuel to carry out work, substantially undercutting British companies.

Steve Radley, chief economist with the EEF manufacturers’ group, said that the Government should reconsider its recent fuel duty increase as rising fuel costs added to other pressures on industry, such as the weak dollar and an uncertain economic outlook. He said: “It would be sensible to rethink that policy. The mood is difficult among manufacturers although it is not yet a mood of despair.”

The EEF is poised to revise down its growth forecasts for manufacturing for this year and next year as the sector struggles with economic uncertainty, high commodity prices and currency issues. It is testing sentiment among its members before recasting its 1.1 per cent growth estimate for this year and its 1.2 per cent prediction for next year.

The southern and eastern division of the Road Haulage Association will meet today to discuss its response to increased fuel costs. Yesterday the Scottish division called for the Government to introduce a fuel price regulator, which would cut the 2p increase immediately but restore it if the oil price fell substantially. It urged the tax change to “help bring about certainty and stability to all who rely on fuel”.

Yesterday the price of oil fell 3 per cent after the International Energy Agency cut its forecast for world oil demand growth. London Brent crude fell $2.79 to $89.19 a barrel.

Fuelling the ire

Duty per litre of diesel

Britain 50p Germany 32p France 29p Italy 29p The Netherlands 26p Portugal 25p Ireland 25p Spain 21p Poland 21p Greece 18p

Source: Freight Transport Association

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