Budget 2016: What does it mean for your business?
The effects of the budget 2016 on fuel and your business
The 2016 Budget by Chancellor George Osborne took place yesterday with predictions that fuel duty would once again stay frozen. We take a look at the decisions made, changes that will happen and how they will affect the future of fuel prices and fuel management.
Commercial fuel savings to be made
Stuart Miles, Director of Sales, Allstar Business Solutions, was happy to see the freeze in fuel duty continue for the sixth consecutive year:
“It was an unexpected welcome to see the chancellor’s fuel duty freeze. Currently fuel duty (57.95p) makes up over half of the pump price whilst VAT adds an additional 20%. The rest is distribution charges and margins.
With the fuel duty frozen since 2011 UK motorists can expect a £75 saving per annum and an added bonus to the logistics sector with commercial vehicles expecting a saving of £270 - £400 per year.
This is a wanted boost to UK motorists and businesses as we expect merchant margins to rise in the near future as they have been operating at an unprecedented low level for the past quarter.”
The freeze to fuel duty has provided businesses like yours with a sigh of relief, encouraging savings and allowing room for growth.
Grey fleet drivers and company car drivers will save a fair amount on their fuel costs per year with this continued freeze whilst logistics and commercial vehicles will see a considerable saving on their fuel spend.
Future of fuel prices
Fuel prices have been falling in general, regardless of the fuel duty freeze. Supermarkets such as Asda, Tesco, Sainsbury’s and Morrisons have provided some of the cheapest fuel to date, well below average.
As you can see from the table below, 2016 started off with slightly higher fuel pump prices, then between the end of January and beginning of February dipped by around 0.06ppl (petrol) and 0.7ppl (diesel). As you can see now though, fuel price is starting to creep up again. This week’s fuel price (w/c 14th March) came in at 101.71ppl for petrol and 102.52ppl for diesel so as you can see, this is a considerable rise in comparison to the low prices many were enjoying.
We spoke with Brian Flood, VP Network and Technical Infrastructure, Allstar Business Solutions, to get his thoughts on how fuel prices may be headed over the next few months.
“The freeze in fuel duty is welcome but we should expect fuel prices in general to creep up by 2-3p as the recent increase in wholesale prices have not been fully passed on. Retailers have been operating on much reduced margins and we would expect these margins to normalise over the next number of weeks and this will push prices up.”
As trends seem to indicate, and as some of the experts are predicting, we could see fuel prices starting to rise again over the next few months.
So, although the Budget 2016 didn’t focus too heavily on fuel price and the fleet industry, it has still served us well in terms of keeping the overall cost of fuel low, at least for the meantime, with the continued freeze on fuel duty.