Every bit could help - companies react to fuel rebate idea

The idea of giving what is known as an essential user rebate to coach and lorry companies was floated by a senior MP who believes such a move could then bring down costs for consumers.

Trevor Wellsted, transport manager of Tanat Valley Coaches, based near Oswestry, said: "I definitely think it is a good idea. We could invest more in our vehicles and our people and give customers a better service."

Transport companies like Tanat Valley can have contracts that were agreed years ago when the price of fuel was much lower, perhaps from when the fuel price was half its current value.

Mr Wellsted said they have made a point of holding their prices down instead of passing increased costs on to their customers. So any relief they get from any essential user rebate would cut the £30,000 to £40,000 the company spends on fuel every month.

The company provides bus services in the Oswestry area as well as coaches for hire. "It is a challenge to absorb high costs," he said. "In contracts it is usual to have a natural progression to account for rising prices but not to the point of them doubling."

He added that if costs were to come down he would be "all for it, it would help out."

Fuel prices have hit all-time highs in recent months, topping £2 per litre for diesel at many filling stations. Coach and logistics companies can get discounts for buying in bulk and are able to claim back the VAT costs.

MPs believe the reduction for hauliers, coaches and logistics operators would then lower food costs as they pass on the savings to supermarkets, which would have a knock-on effect to the general population amid the cost of living crisis.

Tory MP Greg Smith, chairman of the All-Party Parliamentary Group for Road Freight and Logistics, said: “Our hauliers are essential to keeping our economy strong and our supply chains moving.

“However, they are being hit by sky high fuel prices — leaving many with little choice but to pass on these costs to consumers.

“This is pushing up prices and driving inflation and it’s imperative the Government counter this by introducing an essential user rebate of at least 15 pence per litre for hauliers and coach operators.”

He said that a failure to act now will “risk making an already challenging situation significantly worse”

Duncan Harris, transport manager of Salop Haulage, in Harlescott, Shrewsbury, says such a move "could make a difference".

But he doubted whether any cost savings would result in significantly reduced prices for consumers for goods like tins of baked beans.

"Once prices go up it is going to take a long time for them to come down," said Mr Harris. The company has a fleet of 20 trucks and a range of customers in the agricultural, manufacturing, leisure and building sectors.

After paying 80p a litre during covid, the company saw prices it paid for bulk buying fuels rise to £1.91 per litre. It is now down to £1.70 or £1.80 per litre, which includes VAT which they can reclaim.

The Government announced in March it was cutting fuel duty by 5p, but that saving was quickly swallowed up by spiralling costs.

Mr Harris said there is a danger that the same could happen with a rebate.

Steve Dulson, of Dulson Training, which has bases in Shrewsbury, Telford, Roden, Shifnal, and Ludlow, said fuel cost have seen an almost 50 per cent increase in 18 months. It is a big part of the operation.

Mr Dulson said: "Our sector was hit with national lockdowns and the DVSA stopping all testing for almost 18 months.

"This resulted in Dulson Training being almost completed closed for most of that time. Since returning we have worked really hard and been catching up and the demand has been high, however offsetting this with the rising running costs and especially fuel it really has not been as positive a year as what it may seem.

He added; "We will not sacrifice any quality with the services we offer, unfortunate our service relies heavily on driving and keeping vehicles moving. We had hoped to see more action and time is ticking, things are tough.

"It is hard with inflating staff costs, who rightly so are having their own battle with the cost of living and fuel at almost double. The 5pence rebate in March was not seen or felt by ourselves, we did not say any difference at the pump and in fact over a few weeks period the costs overall still increased and have continued to do so."

The Road Haulage Association however backs the suggestion, and said 92 per cent of hauliers felt little or no impact from the fuel duty reduction earlier this year.

The association said running costs for the average articulated lorry have risen from £45,000 to £62,300, forcing operators to pass on increased costs to consumers and onward services wherever possible, and only 3.5 per cent of haulage businesses felt they would remain profitable without further support with fuel prices.

Richard Smith, managing director of the Road Haulage Association, said: “We will have a new Government in place in September, and I’d urge whoever leads it to read this report and follow its proposals. We will also be ensuring the Chancellor and Treasury team are fully aware of it.”

Mr Smith's comments came as the average fuel costs dropped slightly from the all-time highs of 189.46p per litre of petrol, and 197.52p per litre of diesel to 185.05p and 194.3p respectively on Wednesday morning.

Some filling stations across Shropshire have managed to keep their prices significantly below the national average.

Griffiths Garage in Leintwardine and Grindley Brook Garage in Chester Road, Whitchurch, have kept their prices down, charging as little as 161.9p.

The cost of living has also come up in the Tory leadership contest.

Former Chancellor Rishi Sunak unveiled plans to remove VAT from domestic energy bills for a year if the price cap – currently just under £2,000 a year for the average home – exceeds £3,000 as is forecast by experts.

His rival for the role, Liz Truss, has pledged to "start cutting taxes from day one" with a new Budget and Spending Review that would reverse April’s rise in national insurance and next year’s corporation tax hike from 19 per cent to 25 per cent.

Mr Harris, of Salop Haulage, said though that he is already seeing signs that consumer confidence is falling and "people are not spending the money" as they tighten their belts.