Chancellor Gordon Brown’s proposed increase in fuel duty is an act of “broken faith” with the road freight transport industry, according to the Freight Transport Association.

The decision in the Pre Budget Statement to increase diesel duty by 1.25p per litre will increase industry's costs by £170 million, bringing the UK further out of step with the rest of Europe on the cost of road freight transport, the association says.

At 47p per litre, the level of diesel duty in the UK is more than double the EU average rate of 22p per litre.

Simon Chapman, FTA's chief economist said: “The Chancellor himself is on record as saying that the logistics sector is a vital part of delivering future economic success. Yet his decision today suggests he sees the industry as no more than a source of tax revenue that he can plunder with impunity.

“The increase in duty has nothing to do with reinforcing the UK's efforts to reduce its carbon footprint. If traffic levels were influenced by higher fuel prices we would have seen a brake on traffic growth as world oil prices have soared. This has not happened. Instead, overall traffic levels have risen by nearly one per cent per year, similar to the medium term growth rate since 1997.”

Meanwhile, the NFU has welcomed the government’s increased commitment to promote renewable energy.

Brown announced he would extend the 40p duty discount on biogas and said he would extend the 20p per litre discount in fuel duty to so-called “second generation” biofuels.

NFU president Peter Kendall said: “The Pre Budget Statement confirms the NFU view that bioenergy has a real and growing role to play in the future of the country.”

Brown said he would also be looking at preferential rates for company car tax on vehicles capable of using E85 biofuels, a policy advocated by the NFU.

He also announced a focus on science and technology investment.

But Kendall said that while such a move was welcome it was at odds with the expected cuts to the Defra research budget.

He said: “Science and technology will be vital if farming is to make its full contribution to reducing climate change, both by producing renewable energy and raw materials and by reducing its own impact on the environment. Funding in this area should be increased, not cut.”