Fuel duty rises put growth at risk, warn small firmsJan 24, 2011
In a snap poll of more than 400 small firms, 89% said the hike in fuel duty at the beginning of the year will cost them up to £2,000 over the next six months, on top of regular outgoings.
Unlike big businesses, small firms are unable to absorb the cost and in order to deal with the extra expenses, 62% said they would have to increase prices if fuel prices continued to rise. One in ten said they would lay off staff, and 26% said they would freeze wages.
The government is putting its faith in the private sector to put the economy on a firm footing yet, said a FSB spokesman, 36% of respondents would have to reduce investment in new products and services. Nearly eight in ten said profitability would be reduced.
The FSB has been calling for the government to put in place a fuel duty stabiliser – a mechanism to ensure an automatic freeze on fuel duty increases and a reduction in duty to match any increases in VAT revenues from higher pump prices – which the Conservative Party promised when in opposition.
The FSB is concerned that if the government does not act soon and introduce the stabiliser, small firms will not be able to grow and take on new staff. It also wants all future fuel increases scrapped until a stabiliser is put in place.
FSB Luton & South Beds branch chairman Carole Hegley said: “It is clear that without such a measure, the country’s five million small businesses will be put on a knife-edge. It is vital the government goes back to its pledge and puts this stabiliser in place.
"These figures show that the rise in fuel duty is really having a negative effect on small businesses that want to grow, innovate and take on new staff.
“The government has said it is looking to the private sector to put the economy on a firm footing but the hike in fuel duty is doing the opposite and hampering small business growth. With future fuel duty rises looking likely, small firms will be left just trying to survive.