The fleet industry is bracing itself for an additional increase in fuel duty after already suffering a 2p per litre rise at the beginning of April.

Alistair Darling revealed in last week’s budget that fuel would be hit with a 2p per litre price hike from September and 1p per litre above inflation increase each April thereafter to April 2013.

Labelled by the AA as a “fuel duty bombshell”, fleets of all sizes will suffer in what will be the second increase in five months.

“Organisations in all sectors will need to continue to look seriously at their transport policies if they are to mitigate the impact of this move,” said David Brennan, managing director of LeasePlan UK. 

“Making sure you have the right mix between mileage reimbursement, pool cars, leased cars, daily rental and public transport could prove the difference between a company surviving and becoming another victim of the recession.” 

Alan Lunt, finance director at Lloyds TSB Autolease, added: “It also pays to remember that it is a 2p increase with VAT on top, which fleet managers should factor into their calculations. 

“It’s no surprise the fuel escalator has been reintroduced and it underlines the benefit of adopting low CO2 and fuel efficient vehicles as part of a balanced fleet policy.”

For a fleet manager operating 100 vehicles averaging 40mpg and covering 30,000 miles each per year, the 4p rise alone would equate to an increase in fuel duty over a 12-month period of £13,635.

A less economical fleet averaging 25mpg and covering the same annual mileage with the same number of vehicles would have to find an additional £21,792.

And even a 100-strong fleet of environmentally efficient vehicles, averaging 60mpg with an annual mileage of 30,000 miles, would have to pay the Treasury an extra £9,080.

However, fleet managers can help mitigate the increase in fuel duty by employing green transport plans, with one in three companies already preferring to use public transport for business travel, according to Matthew Hunnybun, partner at Price-waterhouseCoopers. 

He added: “While business travel by car is an essential part of doing business for some organisations, such as those with a travelling sales force, cash-strapped companies looking to control costs can make savings by removing private fuel allowances for employees.

“This may be an unpopular change but, with businesses looking to reduce costs where they can without reducing headcount, the downturn is a good time to tackle these sacred cows.

“This option would be a particularly appealing move for those companies looking to improve their green credentials.”
The budget also confirmed that from 2010-11 the biofuels duty differential will cease and support for biofuels will be provided wholly by the Renewable Transport Fuel Obligation.