The Federation of Small Businesses (FSB) busts the myths that a fuel duty stabiliser is too complicated and expensive to put in place, in a new report published today.
Critics have said that putting a fuel duty stabiliser in place - a mechanism to adjust fuel prices in order to alleviate the impact of oil price rise shocks on pump prices - is too complicated, expensive and bad for the environment.
However, in a new report 'A fuel duty stabiliser - is it really that complicated?', the FSB busts these myths and shows that it is simple, affordable and crucial to allow businesses to plan.
By basing the stabiliser on the oil price cycle, the level of fuel duty could be calculated against a trend price for oil. This would then be adjusted at regularly timed intervals following changes in the oil price cycle.
So setting the level of the stabiliser would be straightforward: fuel duty would be X pence per litre minus a proportion of the difference between the current oil and trend oil price.
Introducing a fuel duty stabiliser would also provide greater certainty for businesses and families by stabilising the cost of fuel and allowing them to factor in fuel costs as they plan for the future.
FSB research shows that the rise in fuel duty and uncertainty over fuel prices will have a significant impact on small businesses leading them to increase prices, freeze pay or even lay-off staff.
The FSB is concerned that the cost of doing nothing to alleviate pressures of high fuel prices on small firms will vastly outweigh the cost of implementing a fuel duty stabiliser in the short-term.
The Government has said it is putting its faith in the private sector to lead the recovery, and the FSB believes that by introducing a fuel duty stabiliser, small firms will be able to effectively plan and grow their business.
John Walker, National Chairman, Federation of Small Businesses, said:
"Critics have said that the fuel duty stabiliser is too difficult to introduce. The FSB does not agree. We know that high fuel prices are having a huge impact on our members, hampering growth and in turn the economy at large. It is vital we see action now.
"A fuel duty stabiliser would give the UK's five million small businesses the certainty and stability they need to factor in fuel costs to their business plans. It is unacceptable that the Government has not delivered on its pledge and now says it is too complex. A fuel duty stabiliser can be easily introduced and must be put in place. Without it, small firms are just going to be left simply trying to survive."
Notes to Editors
1. The FSB is the UK's leading business organisation with over 210,000 members. It exists to protect and promote the interests of the self-employed, and all those who run their own business. More information is available at www.fsb.org.uk
2. To view a copy of the report, go to www.fsb.org.uk
3. A fuel duty stabiliser should be based on official forecasts for the oil price cycle as advocated by the economist Andrew Lilico. This is the long term prediction economists give for patterns in fluctuations in the price of oil over a period of time.
4. In December 2010, inflation rose to 3.7%, the highest increase in the cost of living for eight months, this was largely due to the 2.8% rise in the cost of fuel - which is the largest increase since 1996. A fuel duty stabiliser would not only help stabilise the finances of households and small businesses but that of the wider economy as well.
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