Deferred fuel hike fails to impress

Apr 1 2008 by Gareth Vaughan, Western Mail

THE Chancellor’s decision in his recent Budget to postpone plans to raise fuel duty until October has failed to boost his popularity in farmers’ eyes.

On behalf of the FUW, I had written to him twice in recent months urging him to scrap plans to hike fuel duty by 2p per litre last October and on April 1 this year.

He stubbornly went ahead with the October increase despite spiralling oil price rises and merely postponed the April increase until next October.

And worse than that he announced his intention to increase the duty by a further halfpence in 2010 so by then we could be faced with a rise of 2.5p.

With oil prices expected to carry on rising we could be faced with paying well over £5 a gallon well within the next couple of years.

It is a cause for concern that all increases in fuel prices are inevitably passed down the supply chain to the consumer through higher transportation costs and rural areas always bear the brunt of these costs.

So with duty already at over 50p per litre – the highest rate in Europe and double the EU average – accounting for almost half the cost of petrol and diesel prices, Mr Darling’s planned increases are yet another blow to a farming industry slowly recovering from last year’s foot-and-mouth disease crisis.

To make matters even worse, he also announced a major reform of the vehicle excise duty next year. Even though most farmers buy used vehicles owners of higher polluting cars, including 4x4s, will undoubtedly pay more duty in the future.

We believe that 4x4s used by farmers should be exempt because they are a necessary working tool and not a so-called “Chelsea Tractor”.

Mr Darling said his Budget was about equipping Britain for the times ahead and building a fairer society. It is certainly not a fair budget as far as the agricultural industry is concerned.

However, we can welcome his announcement that 30% of government contracts should go to small and medium-sized enterprises (SMEs).

We sincerely hope this will help SMEs operating within the farming industry win far more local procurement contracts in the future.

Gareth Vaughan is president of the Farmers’ Union of Wales