Rocketing fuel prices cripple rural economy

Vee Robinson, chief executive of North East Equality and Diversity (NEED), with one of the organisation's 12 minibuses.
Vee Robinson, chief executive of North East Equality and Diversity (NEED), with one of the organisation's 12 minibuses.

ROCKETING fuel costs in rural Northumberland are having a profound effect on small businesses, it has been claimed, with those reliant on transport being hit hardest in the pocket.

As of this week, the cost of a litre of unleaded petrol at Alnwick’s sole forecourt – Willowtree Services, operated by Co-operative – hit just under £1.41, while diesel was selling at £1.48.

By comparison, average prices in the urban south east of the county were 7p a litre cheaper at both pumps – a difference of nearly 32p a gallon.

The cost has angered local motorists, who have long complained that a lack of competition in the Alnwick area is disproportionately affecting residents forced to rely on their cars in the face of inadequate public transport links.

And their view is now being supported by the Country Land and Business Association, which is calling for a reduction in fuel prices in rural areas of northern England as a new rural fuel derogation pilot gets under way in the Highlands and the Isles of Scilly.

John Vint, who runs Alnwick-based Sovereign Taxis, says his fuel bill has increased dramatically in the last 12 months.

“For the first time, I am using a fuel loyalty card, which saves me around 6p a litre. I had to do this because I dare not put my prices up.

“We’ve just had an email from Northumberland County Council, which controls tariffs, saying that there will not be any further increases in fares allowed for 2012/13, despite the constant rises in fuel prices.

“In a year, the cost of filling my tank up has gone from £55 to almost £80. I’m having to spend £650 a month on diesel, compared to around £450 a year ago. I can’t put my own charges up, so I need to watch where every single penny goes.”

Haulage boss Richard Aynsley, who operates eight lorries out of Alnwick, supports the FairFuelUK campaign, calling for the Government to introduce an essential users’ rebate.

“The price of fuel has got this industry crippled,” he said. “Talk to me on a Friday and I won’t be able to tell you what the price of a litre of diesel will be on the Monday.

“We have contracts which are agreed six months at a time, so we can’t adjust our prices on a weekly basis. We buy around 15,000 litres of fuel a week, so a penny increase costs us £150.

“Six months ago, we were paying 20p a litre less than what we are today, so work it out.

“As far as I am concerned, the station at Alnwick is taking local people to the cleaners. Unless something is done about fuel prices, whole areas will be forced out of business.”

Alison Taylor, owner of Food Local Food, based at Tritlington, which delivers local produce across the North East, said that the company is looking to re-think its business plan because of fuel prices.

“Diesel has gone up 5p a litre in the last week,” she said.

“The problem we have is that we can’t put up delivery charges to our customers, so we have to absorb the cost. We have a lot of rural deliveries and it is a nightmare.

“So much so that we are thinking of sub-contracting that part of the company. It is a real problem and we are seriously looking at re-doing our whole business plan because of it.”

The hike in fuel prices has also had an affect on community transport organisation North East Equality and Diversity (NEED), which transports people with disabilities across north Northumberland.

Chief executive Vee Robinson, said: “We managed to buffer the rising costs for service users for the last three years until September last year when we had to put up our costs.

“That was because of fuel costs in the main. And obviously with the recent hike in costs again, we will have to review prices on a more regular basis.

“In the first quarter of this year, the cost of fuel has risen from £1,400 to £1,700 a week. That is a massive hike for us.

“We are a not-for-profit organisation and all our surplus is put back into the organisation to help it continue. That has been cut down because of rising fuel costs. We managed to buffer it for such a long time but we have got to look at how sustainable we are.”

Roz Tinlin, manager for Northumberland for the WRVS, said: “It does impact on us as our volunteers have to pay out more. We have to go by Government guidelines and pay out what the Inland Revenue says of 45p a mile.

“But it means that volunteers will pay more. We haven’t found that people are not doing things anymore but they are going to be affected in the long-term.”

And Mark Turnbull, owner of Turnbull’s of Alnwick butcher’s, said the rising costs have had an impact on his travelling shop.

“There is no getting away from it,” he said. “Ultimately, that will have to be passed on somewhere along the line.

“We’re also facing rocketing food prices, it is all part of the economy at the moment.

“We try to absorb what we can but it’s not always possible.”

However, he said that the company is looking to do more with its home-delivery service, which will prevent customers having to drive to the shop and will save their fuel.

Residents and businesses in the Highlands and Islands and the Isles of Scilly have been benefiting from a 5p per litre cut in fuel prices since the beginning of this month, but the CLA now wants to see it extended to the north of England.

North policy and public affairs director, Douglas Chalmers, said: “There are large, remote areas across the entire north that would benefit from this.

“In the run-up to the Budget, there is much discussion on how we can stimulate our economy. Rural-based businesses are significantly disadvantaged by being further from road and rail networks and often with poorer broadband availability. Raw materials in and products out have further to travel and most people are dependent on private transport.

“A 5p cut would go a long way to improving their competitiveness.”

FairFuelUK has published a report conducted by the Centre for Economic and Business Research which suggests that a 2.5p cut in fuel duty, rather than costing the treasury, would stimulate the economy and create up to 175,000 jobs. In addition, it would boost GDP by a third of one per cent.

Mr Chalmers added: “We mustn’t forget that a reduction in fuel duty would also have a direct affect on everyone who lives in rural communities. At a time when families really are counting their pennies, living in an area where services and jobs are further away, and there is little public transport, this one change would make a tremendous difference to families as well as businesses.”