AA challenges political parties over fuel duty

AA research reveals that the UK continues to levy the highest level of road fuel tax in the EU – despite four years of a fuel duty freeze.

With the Budget due on Wednesday and fuel duty frozen until after the election, the AA challenges all political parties to commit in their election manifestos to:

• a continued freeze on fuel duty – at least until it matches the average of the three highest levels of fuel tax in neighbouring EU countries;
• two-thirds of fuel duty receipts being ring-fenced for road improvements, maintenance, better gritting coverage, street lighting, green motoring infrastructure, cycleways and safer pavements.

Analysis of road fuel tax levels in Europe shows that, despite UK fuel duty being frozen at 57.95p since March 2011, drivers in this country still pay the biggest chunk (69 per cent) per litre than those in other European countries.

Meanwhile, AA members have called for two-thirds of fuel duty to be invested in roads – financing road resurfacing, repairs, drainage, cycleways, electric car infrastructure and other developments that would make road travel and mobility safer, cheaper, more reliable and less polluting.

In the past calendar year, government figures show that the UK has consumed 17.672 billion litres of petrol and 27.985 billion litres of diesel. With fuel duty frozen at 57.95p a litre, the 45.7 billion litres of road fuel generated £26.5 billion in road fuel duty.

Two-thirds of fuel duty receipts alone would pump £17.7 billion into financing the UK’s roads – double what is currently spent in England. Department for Transport statistics show that, in 2013/14, £3.156 billion was spent on national roads and £5.194 billion on local roads – a total of £8.35 billion.

Diverting £17.7 billion into roads-related expenditure would still leave £8.8 billion from the remainder of fuel duty receipts, £6.1 billion from vehicle excise duty, a further £9 billion from VAT on fuel, and £15 billion from VAT on car sales, company car tax and insurance premium tax – to go into general taxation.

Department for Transport figures show that Highways Maintenance Funding in England will fall from £901 million next financial year to £801 million in 2017/18, with the prospect of £725 million in following years.

Allocations from the fund for roads will fall from 82.42 per cent to 75 per cent from 2018/19 onwards, when the fund will be split: A roads 25 per cent, B and C roads 25 per cent, U roads 25 per cent, Bridges 14 per cent, Lighting 2 per cent and Cycleways and Footways 9 per cent. Until then, the split is: A roads 27.47 per cent, B and C roads 27.47 per cent, U roads 27.47 per cent, Bridges 15.38 per cent, Lighting 2.20 per cent and Cycleways and Footways 0 per cent.

“AA members appreciate that, with huge swings in the price of petrol and diesel since 2011, the Government’s freeze on fuel duty hasn’t added to the burden on family and business finances. But, the fact that UK drivers still pay the highest level of fuel tax in the EU shows just how massively pumped up fuel duty was before the Coalition froze it,” says Edmund King, the AA’s president.

“It still generated more tax for the Government than business rates and only £400 million short of council tax receipts in 2013/14 4. Consequently, so many drivers are saying, rather than a cut in fuel duty, we want a continued freeze and more of it spent on what it is supposed to do: keeping UK roads fit for purpose, upgraded to meet new demands and making them safer. Drivers are sending out a strong message to all political parties that they could vote with their wheels unless there are clear commitments to fair taxation and expenditure.”