Concern that fuel duty could rise by 23% in late March 2023 has resurfaced after Prime Minister Rishi Sunak repeatedly refused to deny that the planned increase will be shelved.
The proposed uplift – which would add 12.18ppl to the cost of diesel and petrol – is detailed in an economic and fiscal outlook document published by the Office for Budget Responsibility after Chancellor Jeremy Hunt’s fiscal statement on 16 November.
Mr Hunt has since said that the rise does not represent firm government policy and that a decision will be taken ahead of the Budget in spring 2023. Mr Sunak would not be drawn on whether it will go ahead when he was quizzed by the Liaison Committee on 20 December, instead deferring to Mr Hunt’s earlier comments.
Committee member Harriett Baldwin MP pressed Mr Sunak on the mooted increase and asked him to confirm that it “is not going to happen.”
In response, Mr Sunak referred to his own time as Chancellor and noted that when holding that office, he preferred the Prime Minister to make “absolutely no comments about future tax policy, so I will very much adhere to that.” Mr Sunak stuck to his guns when further questioned by Ms Baldwin and would not be drawn on the rise.
While many coach operators have reported that increasing diesel costs have been more than mitigated by rates growth in 2022, that is not necessarily the case on contracted services. An fuel duty increase of around 12ppl – the first in cash terms since 2011, and a record rise – would add stress to an industry that is suffering from multiple other cost pressures, as it would the bus sector.
In contrast to a possible increase in fuel duty, RHA has repeatedly called upon ministers to roll out an essential user reduction of at least 15ppl. That would capture coaches. RHA’s proposal has attracted support from a significant number of MPs. The current reduced fuel duty rate of 52.95ppl was introduced on 23 March for a 12-month period.
In July, fellow trade body the UK Coach Operators Association (UKCOA) called for a targeted 15ppl fuel duty rebate for coaches when operating a scheduled service as defined by PSVAR. UKCOA said that such an approach would reflect a reticence among some contract awarding bodies to increase rates for home-to-school services to reflect rising diesel costs.
