Action needed on fuel duty to help firms cope with oil prices

The government needs to take steps to offset the effects on small firms of soaring fuel costs, a leading small business group has argued.

According to the Federation of Small Businesses (FSB), small firms are being hampered in their efforts to develop and expand because of rising oil prices.

In a poll of over 9,000 FSB members, some 80 per cent reported that fuel costs are likely to make it more difficult for them to grow their businesses and hire more staff in the next 12 months.

Nearly 40 per cent said that fuel costs would make it likely that they will have to reduce staff numbers over the same period.

The FSB, therefore, has called on the government to set up a mechanism whereby higher than expected tax revenues from North Sea oil would trigger corresponding reductions in fuel duty.

John Wright, the FSB’s National Chairman, said: “Small businesses are reaching breaking point, and if something is not done about rising fuel prices very quickly then we will have a major economic crisis on our hands.

“The UK’s 4.5 million-strong small business community simply cannot cope with the cost of fuel rising at these rates. The problem is affecting every type of business in every area of the country.

“The most frustrating thing is that the government can do something about it. Its estimate of the cost of North Sea oil in the last Budget was well below the actual cost, which means that tax revenues have been well above expectations. Why can’t they use this extra money to reduce fuel duty and ease the pain for the millions of small businesses that keep the UK economy afloat?”