Fuel duty applied to diesel used by coaches should be cut to the same 11.1ppl rate as incurred by the rail industry, the Confederation of Passenger Transport (CPT) has said.
That call was directed at Chancellor Rishi Sunak in a letter from Head of Policy Alison Edwards in late April. Diesel consumed by coaches is currently subject to the standard 52.95ppl rate of duty. Steep increases in costs over the past 12 months have hit the sector hard, and those must be mitigated for it to “continue to provide sustainable and reliable services that connect the public with education, employment and other essential services,” says Ms Edwards.
CPT has calculated that if the duty applied to fuel used by coaches was reduced as it is asking for, that would be worth approximately £260m per annum to the industry. That sits against a contribution to the economy from coaches’ tourism-related activities alone that reached £14bn in 2019, the Confederation estimates.
CPT’s figures suggest that in a typical year at the current rate of duty, the coach industry would contribute around £330m in fuel duty to the Exchequer. “It is only right that coach and rail are treated equally given their crucial role in delivering sustainable transport solutions,” Ms Edwards has told Mr Sunak.
“We ask that you correct this anomaly in the fuel duty system by putting in place fuel duty relief on diesel for all coach operators, so that coach pays the same amount as rail and is on a level footing,” she continues. Rising diesel prices have led to coach operators’ costs increasing “by 10% or more in some cases,” CPT says.
The Confederation wants to see its proposed cut to fuel duty for coaches applied permanently. In the short term, parity with rail would provide the industry “with breathing space.” In the longer term, “it would allow the sector to continue its vital work in connecting communities, supporting tourism and giving the UK a greener transport network.”
The outright cost to the Exchequer of such a duty reduction would reduce over time as the coach industry improves its fuel consumption and transitions away from diesel, CPT continues. It says the latter work is being led by its Zero Emission Coach Taskforce.
Failure to assist the coach sector with fuel costs potentially compromises the viability of some of the services it provides, including home-to-school and rail replacement, Ms Edwards notes. They were the only two workstreams that Under-Secretary of State for Transport Baroness Vere described as “essential” among comments made in early 2021 that caused widespread anger in the industry.
Some coach services are now running at “a significant loss” because of spiralling diesel costs, CPT continues. As an alternative to the Confederation’s call for a major cut in fuel duty across the board for coaches, one operator earlier suggested that a diesel price escalator be applied to home-to-school contracts run on behalf of local authorities to reflect ‘real time’ fluctuations.
