By Max Clarke

Rises in fuel duty are stifling eight in 10 small firms, but the Federation of Small Businesses (FSB) is concerned that it severely affecting key sectors needed for economic growth, new statistics show.

Interim results from more than 1,000 respondents to the FSB ‘Voice of Small Business' survey panel show that rises in fuel duty will negatively impact 79 per cent of small businesses.

However, the FSB is particularly concerned that the manufacturing industry (86%), the construction sector (79%) and the transport industry (83%) are being severely affected.

Manufacturing is one of the few sectors that has seen growth and the FSB is concerned that these and further price rises could hamper this good news.

Previous research by the FSB shows that the hike in fuel duty will cost small firms up to £2,000 over the next six months, on top of regular outgoings. Unlike big businesses, small firms are unable to absorb the cost, and so to deal with the extra expenses they will have to increase prices, lay off staff and freeze wages.

The manufacturing sector contributes £133 billion to the economy and employs 2,494, 000 people. The FSB is concerned that the rise in fuel duty could undo the good news seen in the manufacturing sector.

"We all know”commented John Walker, National Chairman, Federation of Small Businesses, “that the rises in fuel are having a huge impact on everyone across the country, not least of all small businesses. We have seen recent good news in the manufacturing industry so it is extremely worrying that key sectors, such as this and construction are being so negatively affected. Small firms have said they might have to freeze wages and lay off staff and the last thing it needs is more rises in fuel duty to hamper this good news.

The FSB is calling on the Government to reverse the planned 1 pence rise in fuel duty the Budget next week and is urging it to introduce a fuel duty stabiliser — a mechanism to adjust fuel prices in order to alleviate the impact of oil price rise shocks on pump prices — as promised.

In an Opposition Day debate today, there will be calls to cut VAT on fuel in the Budget —a move the FSB would support. However, small firms need more certainty in fuel prices and the confidence to factor these into their plans for growth.

The FSB believes that while a cut in VAT would lower the price at the pump, it will not stem the volatility in fuel prices in these uncertain times — something a fuel duty stabiliser would.

Critics have said that putting a fuel duty stabiliser in place is too complicated, expensive and bad for the environment. But the FSB has demonstrated in its report ‘A fuel duty stabiliser — is it really that complicated?' that is simple, affordable and environmentally friendly.

Introducing a fuel duty stabiliser would provide greater certainty for businesses and families by stabilising the cost of fuel and allowing them to factor in fuel costs as they plan for the future. The FSB is concerned that the cost of doing nothing to alleviate pressures of high fuel prices on small firms will vastly outweigh the cost of implementing a fuel duty stabiliser in the short-term.

Continued Walker: "Reversing the planned 1 pence rise — which when indexed to inflation will actually mean a 5 pence increase on pump price — and cutting the VAT on fuel duty in the Budget next week will be welcome steps But to really stem these volatile prices the Government must introduce a fuel duty stabiliser as it promised. Small firms are under huge pressures — stabilising fuel prices will be a step in the right direction to really help small businesses in all sectors grow."