Federation of Small Businesses demands government action on fuel duty as 40% of small firms warn of impending staff cuts this year

The Federation of Small Businesses (FSB) has warned that rising fuel costs are forcing small firms to cut back on staff and is demanding government action to relieve the pressure.

An FSB survey of small business owners revealed that 40% expect to cut staff in the next 12 months in response to rising fuel costs, while 80% believe the fuel crisis will hamper plans for expansion and new staff hiring. More than 9,000 FSB members responded to the survey.

The FSB wants the government to act to relieve the pressure on small businesses, which contribute more than 50% of the UK's GDP. It has proposed a mechanism whereby higher-than-expected tax revenues from North Sea oil would trigger corresponding reductions in fuel duty.

John Wright, FSB national chairman, said: “Small businesses are reaching breaking point and if something is not done about rising fuel prices very quickly then we will have a major economic crisis on our hands. The UK's 4.5m-strong small business community simply cannot cope with the cost of fuel rising at these rates.

“The most frustrating thing is that the government can do something about it. Its estimate of the cost of North Sea oil in the last Budget was well below the actual cost, which means that tax revenues have been well above expectations. Why can't they use this extra money to reduce fuel duty and ease the pain for the millions of small businesses that keep the UK economy afloat?”