March 2022 Budget Comment

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Pump prices have hit fleets particularly hard over recent weeks and so the 5p cut in fuel duty must be welcomed.

This may be ‘the biggest cut to all fuel duty rates ever’, but we cannot lose sight of the fact that this cost burden has not just arisen following the crisis in Ukraine. Average petrol and diesel costs have risen by 33% and 38% respectively in just 12 months, from 124.6p and 129p per litre in March 2021.

Oil price volatility shows few signs of abating and so fleets must find other ways to ease the financial pressure. With the business case for electrification growing ever stronger, fleet fuel strategies should continue to be reviewed, along with cost control measures that can help ease the financial burden – from effective vehicle maintenance and fuel discount structures to more effective mobility management.

It is also worth noting that the decision since 2010 to freeze fuel duty has led to an increase in emissions of up to 5%, so the fuel duty cut obviously does little to support the UK’s Road to Zero ambitions. The Chancellor may have scrapped VAT on home energy-saving measures such as insulation, solar panels and heat pumps but has offered fleet operators nothing in the way of any new incentives to encourage EV take up which may have helped balance out the CO2 impact of the fuel duty rise.