Fuel crisis 'crippling' businesses - government urged to step in

Fuel Pump

The Suffolk Chamber of Commerce has called on the government to do more to help with the rise in fuel prices. - Credit: Archant

As the cost of petrol and diesel continues to increase - hitting £2 per litre in part of Suffolk - business chiefs have called on the government to do more to help.

The Suffolk Chamber of Commerce says the high fuel prices are having a "crippling impact" on day-to-day economic activity.

The price of E5 unleaded petrol has risen to above £2 per litre at the Shell garage on Farnham Road, in Saxmundham, which was confirmed by staff on Wednesday. 

The price of unleaded is averaging just over 187 pence per litre and diesel averaging 193.3 pence per litre nationally, according to data from the RAC.

Managing director of taxi firm Sudbury Cars, Patrick Crew, said the rising cost has led to the company having to increase prices on certain journeys.

He said: "Diesel prices have gone from an average of £1.37 in August 2021, after the delivery shortages, to £1.90 as an average locally as of last week, with almost daily increases, a 38%+ increase locally in six months alone.

"Do we believe that they will go over £2.00 locally? Sadly, yes.

Most Read

"As a company we left our local prices unchanged after the April 2022 fuel shortages and absorbed the costs as a company, albeit increased our airport prices, which we have had to again as these are our longest regular runs, especially to Heathrow and Gatwick.

"Albeit our price increase will still be well below the actual fuel price increases over the course of the year, meaning we are absorbing some of the cost for our customers. Should fuel prices drop, then we will drop our prices.

"The price at the pump, even when the price of Brent crude and wholesale prices fell, for example last year, post August 2021, did not, in turn, fall, and have only continued to rise."

Patrick also believes that the government should step in and help, adding: "The best idea that has been tabled to date, via the AA, is that of a price leveller where the price remains at a constant with the value of the tax taken rising and falling in-line with Brent Crude/wholesale prices.

"The fuel increases, with more to come, will be the catalyst for a deep recession in the UK, if things carry on as they are without any tangible intervention from the government."

Representative of the Suffolk Chamber of Commerce, Paul Simon said: “Regardless as to whether diesel and petrol price increases, slow down or reach the psychologically significant level of £2 per litre, fuel costs for most Suffolk businesses and their workforces are already crippling in their impact on day-to-day economic activity.

Paul Simon, from the Suffolk Chamber of Commerce.

Paul Simon, from the Suffolk Chamber of Commerce. - Credit: Nicky West

"There is evidence that they are also having a negative impact on longer-term plans, which is not good in terms of future growth and employment prospects.

“Business cash flow is under intense pressure. Orders that many of our members secured a few months ago could end up costing them money to deliver because of intervening labour and raw materials inflation.

"Record fuel costs are slowing down businesses’ plans to get more staff back into their offices, even on a part-time basis. Others are suggesting that some staff are looking to cut back on their hours in order to reduce their own cost of living.

"At a time when businesses are struggling to recruit and retain talent, these short-term trends are less than helpful.

“The government has the fiscal tools to help alleviate these pressures now. Nearly half of the cost of fuel in the UK is down to duty and VAT.

"There is little point in the Competition & Markets Authority investigating whether the earlier 5p fuel duty has been faithfully passed on by retailers without the government also intervening to reduce its own take."

Suffolk Chamber is stepping up its pressure on government and has three demands:

  • An immediate, significant reduction in fuel duty and VAT for the next 12 months.
  • A temporary increase in the mileage allowance from 45p to nearer 60p per mile, so that there is no disincentive for staff to use their own vehicles for work-related purposes.
  • A strategic commitment to delivering a pro-business programme for the remainder of this Parliament to include a lower business tax burden, further incentives for start-ups and scale-ups to speed up the delivery of their growth plans and tax incentives to invest in capital and training.

Mr Simon added: “Suffolk’s hardworking and entrepreneurial business leaders can only do so much in times such as this. Government, using the fiscal tools at its disposal, needs to help with the rest.”