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Products body calls for delay on fuel tax rise

Chancellor urged to suspend fuel duty rise to ease pressure

MATERIALS producers have called on Chancellor Gordon Brown to defer planned increases in fuel duty to ease pressure on costs in the industry.

The Construction Products Association is writing to Mr Brown to press for the postponement of the 1.9p per litre rise due in September as oil prices soar following terrorist strikes in Saudi Arabia.

Major products companies decided to signal their concern at an association board meeting last week.

Mr Brown has pledged to review the tax rise in August.

Chief executive Michael Ankers said: 'There are enormous cost pressures on energy at the moment and this seems like a daft time to put a tax on fuel.

'It is counterproductive and the increases are going to have to be passed through to the industry.'

The rise is set to hit overheads among hirers such as Speedy Hire, which has the biggest delivery fleet in its sector.

Finance director Neil O'Brien said: 'We use seven million litres of fuel a year.

'Last year we paid an average of 78p, this year we have budgeted for 80p.

'But every time you have a penny price increase, it could cost us £70,000.

'Last year the price spiked early in the year. But it fell back again and we are hopeful that the same will happen again.'

National Federation of Builders spokesman Paul Kendrick - who represents over 3,000 firms - said: 'Any increase on fuel duties would have a significant and direct impact on profitability.

'It will especially hit small- and medium-sized contractors who will struggle to absorb the costs.

'Increased transportation costs would also affect materials prices, which would ultimately hit their bottom line.'

A Construction Confederation spokesman said: 'This is just the latest hike in commodity prices facing our industry, following the soaring cost of steel, and threatens to squeeze margins even further.'

The Freight Transport Association has also added its voice to the call to defer the levy.

A spokeswoman said: 'This will have a big effect on overheads as fuel accounts for around 30 per cent of the cost of running a truck.

'This is going to affect a lot of smaller operators, who are generally running on very tight margins of around 3 per cent. A 10 per cent increase in fuel will hit them hard.'

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