Cut duty on fuel if price stabiliser won’t work

A small business support organisation is calling on the Government to cut fuel duty if its proposed ‘fuel price stabiliser’ proves too impractical to implement.  With the recent VAT increase and widespread predictions of permanently high oil prices, the Forum of Private Business is arguing that a straightforward reduction in duty would be the simplest way to tackle soaring prices at the pumps.

The Forum made the call in response to new comments from the Prime Minister, David Cameron, in which he signalled that the Government was again looking into the idea of a fuel price stabiliser.  The stabiliser would be a mechanism designed to reduce the tax on petrol and diesel as the price of oil rises, and visa versa, in order to keep fuel prices relatively constant.

The idea was originally proposed in the Conservative pre-election manifesto but appeared to have been dropped after the Chancellor, George Osborne, instructed the Office for Budget Responsibility (OBR) to look into it. According to reports, the OBR claimed that the stabiliser would be too impractical and costly to implement. 

If the same conclusion is reached again, the Forum believes the Government should simply cut the duty it charges on fuel – reversing recent increases at the very least.  This, the Forum is arguing, would help secure economic recovery and help the millions of smaller businesses across the UK which are struggling with the current record prices on the forecourts.

Forum chief executive Phil Orford said:- “The idea of the fuel price stabiliser was sold to the public quite heavily by the Conservatives before the election and we supported it from the outset.  Both high and fluctuating fuel prices cause serious problems for smaller companies and their cashflows, so we would welcome any attempts to tackle the problem. However, since gaining power, Mr Cameron’s Government has failed to follow through on the stabiliser concept. Instead, it has actually increased duty on fuel by going ahead with 2 rises inherited from the previous administration, and effectively implemented a further price hike this month with the 2.5% increase in VAT. Obviously, smaller firms in the haulage and transport sectors are particularly badly hit by ever-increasing prices at the pumps but companies of all types ultimately suffer the inflationary knock-on effects, as costs are passed on and consumers have less disposable income to spend.   The spiralling cost of unavoidable expenses like fuel and utilities are one of the main problems facing smaller businesses at the moment. Our recent ‘Economy Watch’ research found that, despite an upturn in sales and orders, SMEs are struggling to maintain their profitability because of these increased costs, so the issue is threatening economic recovery. The utility companies claim their prices can’t be reduced due to rising wholesale costs. However, the price of a litre of fuel could be reduced at a stroke by the Government as almost 75% of the price paid at the pumps is simply tax. If the fuel price stabiliser is again deemed to be unworkable, a significant reduction in duty – or perhaps a reclassification of the VAT rate on fuel – is desperately needed to help keep businesses moving. It is widely predicted that oil prices are only going to keep rising over the long-term so perhaps there is little need for a stabiliser mechanism anyway.  The debate over fuel prices is often skewed by the wider environmental debate.  But the fact remains – our economy currently relies on transport, and therefore oil, at virtually every level, and until alternative technology become widespread and affordable, businesses have no choice but to use petrol and diesel in order to function. I appreciate the Government needs to tackle the national debt but it would be self-defeating if economic recovery is derailed due to excessive taxation on something which is absolutely central to commerce.”

Research carried out by the Forum in November found that many small businesses experienced a rise in orders and turnover towards the end of 2010.  30% of members on the Forum’s ‘Economy Watch’ panel saw increases in their order books and turnovers, with only 16% reporting a decrease.  Business for the remaining 54% stayed steady between the Forum’s previous survey in mid October and the late November study.

However, many business owners on the panel also reported a sharp drop in profitability during the same period as increases in fuel costs, energy prices and raw materials hit home.  At 46%, almost half of the firms surveyed said they had seen a recent increase in the cost of doing business, with only 1% reporting that costs had fallen.  As a result, 27% of Economy Watch panel members reported a decrease in profitability since they were last surveyed in October, compared to just 14% who reported an increase.

Liverpool banks on culture

CULTURE is helping Liverpool buck the spending downturn.  New figures show the city’s visitor numbers are on the up - and those who come here are spending more money than they did in 2009. Last year’s Mathew Street Music Festival (MSMF) smashed the previous year’s visitor figures by a whopping 20,000, bringing in an impressive £20 million to the city compared to just £15 million in 2009.  And despite the tough economic times, each visitor spent an average of £57.25 during their stay in the city, whereas in  2009 £53 was spent per person.  The announcement comes following Culture Liverpool’s review of the success of four of the city’s major events in 2010 – MSMF; Africa Oye - the biggest free African music festival in the UK; On The Waterfront - a series of events which celebrates the culture of Liverpool; and the Picasso - Peace and Freedom exhibition which was showcased at Tate Liverpool.

Figures show:-

► 320,000 attended MSMF in 2010, compared to 300,000 in 2009

► 12.6% of visitors were from outside the city, compared to 11.7% in 2009

► Africa Oye attracted 50,000 visitors in 2010 – double the number in 2009

► The celebration of African culture brought in £1.3 million to the city’s economy

► On the Waterfront attracted more than 65,000 people and brought in £1.2 million to Liverpool

► 95,424 people enjoyed the Picasso exhibition, 74% of these were from outside the Liverpool city region and 21,000 had never visited Liverpool before

Liverpool City Council’s cabinet member for culture and tourism, Councillor Wendy Simon, said:- “These figures are fantastic and show that, despite the fact that money is tight, culture continues to play an important part in people’s lives and if we can deliver events and festivals which inspire them, they will continue to come and spend money in the city.  Many people thought there would be a post-08 slump, but we’ve shown that the city’s economy continues to benefit by millions of pounds because of the high-calibre events which we put on throughout the year.  Culture remains as important as ever and this is reflected in this year’s impressive events programme which will not only see the city hosting the Liverpool Boat Show, but also the return of the much-loved Mersey River Festival.”

Liverpool is well on track to surpassing the economic impact of 2009’s cultural programme, which saw £33 million generated for the city. So far £23 million has been brought in to the city, and there are several large events to take place including A Winter’s Trail: Liverpool Discovers and Chinese New Year.  MSMF and On The Waterfront were all funded by Liverpool City Council in partnership with the European Regional Development Fund (ERDF). Africa Oye was part funded by the city council. Picasso - Peace and Freedom was supported by ERDF, with additional support from the Spanish and Andalucía Tourist Offices and the Spanish Embassy Cultural Office.

Wiley Launch Party on Sunday, 16 January

THE extremely talented singer – songwriter, Janiece Myers, who is from Liverpool, began her solo career in October 2009. In March 2010 Janiece Myers’ independently releasing her first EP, ‘In My Element’, which received over 6,000 downloads in its first month due in part to a superb online fan base and highly credible showcases. Soon after Janiece was spotted by UK Urban Music Legend, Wiley, who snapped her up, bringing her into A-List. Janiece Myers is now a part of one of the hottest collectives this country has seen; working with the likes of Wiley, J2K,Baby Blue, Shola Ama, Sadie Ama and Mz Bratt. Janiece Myers’ first single, Underground Love, which features Wiley, will be released via A-List Music. Underground Love has already been championed by Mistajam, Westwood, Ras Kwame and more. Janiece Myers Launch Party 'Underground Love', takes place at The Picket on Jordan Street, Liverpool, on Sunday, 16 January 2011, from 7pm. Tickets are just £5.00, pay at the door. Visit:- myspace.com/picketliverpool and also log onto:- facebook.com/philiphayesmusic  for more information.