Procurement · 10 January 2018

Rising fuel prices see operating costs for small businesses soar

fuel prices
Petrol and diesel prices are at their highest level for three years

The rising cost of fuel is becoming a serious threat to the survival of small businesses, particularly those in remote areas, a business group has warned.

The Federation of Small Businesses (FSB) has said that rising fuel prices at the start of 2018 has been the main cause of a surge in operating costs for smaller firms.

The warning follows a government announcement that the price per litre of petrol and diesel rose to £1.21 and £1.24 respectively in January – the highest level in three years.

FSB national chairman, Mike Cherry, called for government intervention to support small companies. He said: “Affordable travel on roads is absolutely vital to the success of small businesses and local economies, particularly in rural areas.

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“The proportion of our members reporting a rise in operating costs is at its highest in five years. Almost a third say fuel prices are a main cause of that increase, up from less than a fifth at this time last year.”

Cherry urged the government to ensure that the “critical” fuel duty freeze – set out by the chancellor in the Autumn Budget – was continued into the future. In his speech in November, Philip Hammond froze fuel duty for the eighth year in a row.

Cherry added: “Over the coming year, we look forward to the government doing its upmost to help small firms battle the rapid rise in operating costs. Where vehicles are concerned, that also means taking a hard look at the ever-increasing insurance premium tax (IPT).

“Diesel vehicle owners are set to be hit with significant additional costs once forthcoming Clean Air Zones are in place. We need to see the government step up support for the many small firms looking to play their part in improving air quality by switching to cleaner vehicles.”

Following the government’s analysis of fuel prices since December 2014, road services firm the RAC warned motorists last week that the “good times” of lower cost fuel in the UK appeared to be over.

RAC spokesperson Simon Williams told The Telegraph: “Sadly, December was the month oil reached its highest point for over two and a half years – something which motorists are now feeling the effect of at the pumps.

“It’s hard to see pump prices getting much cheaper in the early part of 2018.”

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ABOUT THE EXPERT

Fred Heritage was previously deputy editor at Business Advice. He has a BA in politics and international relations from the University of Kent and an MA in international conflict from Kings College London.

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