Small businesses will have to lay off staff, freeze wages and reduce investment in new products and services if fuel duty prices continue to rise, according to a Federation of Small Businesses (FSB) poll.

The FSB is calling on the government to honour the Conservatives’ pre-election pledge to introduce a fuel duty stabiliser, which would ensure an automatic freeze on fuel duty increases and a reduction in duty to match an increase in VAT revenues from higher pump prices.

In the snap poll of 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. More than one in three (36%) said they would have to reduce investment in new products and services and nearly eight in 10 (78%) said their profitability would be reduced.

Lesley Brown, an independent retailer in Barnstaple, Devon, said further fuel duty rises could threaten her daily home delivery service, which goes out to 250 people. “We’ve also faced carriage charge increases on newspapers, and fear that fuel duty rises will push these up further,” she added. 

The FSB has warned that unless the government introduces the stabiliser, small firms will not be able to grow and take on new staff. It is also calling for all future fuel increases to be scrapped until a stabiliser is put in place.

John Walker, FSB national chairman, said: “The government promised in opposition that it would put a fuel duty stabiliser in place, and 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.”

Danny Alexander, chief secretary to the Treasury, has said the government is considering piloting discount schemes in rural areas where residents are more reliant on cars. But he said the fuel stabiliser was “a complicated idea” and “difficult to see precisely how we achieve it".

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