Budget: VED frozen but costs up
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• Hauliers' operating costs will rise by an average of 1.1% this week following a Budget which freezes VED but adds a massive 2.28p/lit to the pump price of derv.
The so-called Budget for Business has cold-shouldered the wheels of industry, say operators, who are infuriated by Chancellor Lamont's pledge to increase dery prices by another 3% above inflation in future Budgets. Fuel increases alone are likely to add up to £500 a year to the running costs of an average 17-tonnerand up to £1,000 a year for an average 38-tonner.
According to a leading fuel analyst, operators will now pay 36.5p/lit (ex-VAT) for bulk dery and around 44p/lit at the pump.
An angry Derbyshire haulier summed up the fuel news: "We are working to such tight margins I will have to pull the wagons off immediately if customers don't absorb the cost."
Though operators are relieved that VED has been frozen on heavy vehicles, the fuel increase puts the UK near the top of the EC fuel tax league at a time when it will be very difficult to recover by putting prices up.
Overall, say many operators, the Budget could have been a lot worse. But in the depths of the recession extra running costs are bound to cost jobs. For an operator with a dozen 38-tonners, the extra running costs announced this week will cost him £12,000 a year—or an average driver's salary.
Other general business measures introduced by the Budget include: Private users of company vans will face an extra tax bill of £125. O Hauliers will not pay more than 3.6% extra on Business Rates.
O Employees will pay an extra 1% of their employees' National Insurance Contributions from April 1994.
CI The point at which a haulier must register for VAT now starts at an annual turnover of £37,600. Paying VAT when invoices have been paid by customers starts at a turnover of £350,000 a year, and VAT can be recovered on bad debts after six months.
Budget comments round the industry include: El "We would have a weekly £800 increase in dery costs on our fleet of 10 trucks if we didn't buy our fuel in France." WM Young, Uttoxeter El "We are disappointed that the Chancellor did not lower VED for commercial vehicles: UK haulage costs mean hauliers are in danger of losing business to European competition. SMMT.
"It's good that the Government finally realises it is cars which should be taxed more for using roads. We plan to fit more of our vehicles with aerodynamic fairings." Exel Logistics..
MAIN POINTS OF BUDGET Fuel dutyincreased by 10%, increasing average total costs by 1.1% - this will mean for an average operator: • Average increase for a 7.5tonner £250 a year.
Average increase for a 17tonner £500 a year. *Average increase for a 30tonner £700 a year.
• Average increase for a 38tonner £1,000 a year.
Estimated bulk price of dery will now be 36.5p/lit (ex-VAT).
Estimated pump price of dery will now be 44p/lit (ex-VAT).
• VED frozen for LGVs—but tax on light vehicles up by £20 up to 7.5 tonnes GVW.