UK logistics groups welcomed the decision in today’s new budget to maintain a 5p-per-litre fuel duty cut and avoid planned increases, and ensuring warehouse rates do not rise, but there have also been warnings that businesses continue to face significant cost pressures.
In his first budget as chancellor – and first for the new Burnham government – John Healey rowed back plans to increase fuel duty by 3p per litre in January, followed by a further 2p rise in March, to ease some of the burden on the UK’s supply chains.
Logistics UK chief executive Ben Fletcher said the move was a “a wise decision” that would help keep trade moving, support economic growth and avoid adding to the already substantial inflationary pressures.
“We are delighted that that the Chancellor has listened to Logistics UK’s strong case for maintaining the duty cut at a time of global uncertainty and rising costs for businesses and consumers,” Mr Fletcher added.
Describing the price freeze as “the right call,” Road Haulage Association managing director Richard Smith said operators remained under severe financial pressure, citing the additional £385 per week hauliers were paying in fuel despite 85% reporting reduced margins.
Mr Smith said that the RHA has “been clear: a fuel duty hike is a food price hike, and with businesses and households struggling with additional fuel costs, the decision to keep prices frozen will offer some relief,” but stressed “ministers should have gone further”.
“The government can still support our sector as critical national infrastructure. A 15p per litre fuel duty rebate for essential users, similar to schemes elsewhere, would provide cashflow support, keeping many more haulage, coach and van operators in business,” he continued.
Elsewhere, the UK Warehousing Association (UKWA) welcomed the decision not to increase business rates on large warehouses, with chief executive Clare Bottle saying it was “a bullet dodged” after weeks of concern about higher property taxes.
“The UKWA has led the charge to persuade the government that a rise in property taxes for warehouses would inexorably lead to higher costs for business and consumers, and we are pleased our argument has been heeded,” she said.
However, Ms Bottle warned seven in 10 large distribution warehouses remained subject to the high-value business rates multiplier as operators faced rising fuel and employment costs, while also criticising policies that left businesses outside favoured sectors at a disadvantage.
Sharing the general view that the fuel duty freeze was a smart one, Metro Shipping offered a cautiously optimistic assessment, highlighting the more resilient growth forecasts and the removal of import tariffs on over 100 products.
In a statement, the company said that “whether the wider optimism translates into stronger trading conditions remains to be seen, but global container volumes are already setting new records”.