The logistics sector cannot shoulder the burden of any more tax increases without fuelling inflation and stifling growth across the economy, is the assertion made by business group Logistics UK to the Treasury ahead of the Autumn Budget.
The formal submission to the Treasury from Logistics UK, which is one of the UK’s largest business groups and only trade body representing all logistics, outlines how logistics costs are embedded in all products from food and medicines to construction materials and consumer goods: raising taxes in the sector, whether through fuel duty, employer National Insurance Contributions (NICs) or business rates will translate into higher prices for households and businesses.
The logistics sector employs 2.7 million people, 8% of the UK workforce, and Logistics UK’s analysis shows the recent rise in employer NICs will cost the sector an estimated £1.7 billion this year. Fuel duty is another major pressure for business, with a fifth of all fuel duty collected by HMRC paid by logistics businesses, and Logistics UK’s submission calls for no more duty to be put on fuel.
Logistics UK’s Acting Chief Executive Kevin Green commented, “The Chancellor has said she is planning ‘targeted action’ to bring down inflation and it is vital she understands that increasing fuel duty would run the risk of doing the exact opposite. Fuel accounts for around a third of the cost of operating a 44-tonne HGV, so as well as driving up inflation, increasing fuel duty would harm the health and competitiveness of the sector that already pays more than £5 billion each year to the HMRC in fuel duty. The tax also hits smaller operators the hardest as they are often unable to negotiate contracts that enable them to pass on the increased cost of fuel to their customers.”
Logistics UK is also urging the Treasury to ensure reforms to the business rates system protect investment in logistics infrastructure and do not create additional inflationary pressures. Green explains, “Business rates are a significant fixed cost for logistics with warehouses, distribution centres and logistics hubs across the country facing rising bills. Plans for a higher multiplier on properties with a rateable value above £500,000 will disproportionately affect our sector. The business rates reforms, as they are currently proposed, will add millions to operators’ costs, which will ultimately be passed on through supply chains to retailers and consumers.
“The Autumn Budget needs to recognise how logistics underpins our economy and is fundamental to our way of life. As the Modern Industrial Strategy states, it ‘makes a vital contribution to the UK economy and the competitiveness of the Industrial Strategy growth-driving sectors (IS-8), ensuring that the right goods are in the right place at the right time’. It supplies our hospitals, schools, factories, construction sites, shops and homes with everything they need, everywhere, every day – nothing moves without logistics.”
A spokesperson for the RHA echoed these pleas. “Everything we eat, drink, wear and consume depends on road haulage services and the companies and drivers that operate them. Road freight moves 81% of all goods and 98% of agricultural and food products.
“This is why we’re calling on the Chancellor to announce measures in her Budget that will reduce costs for transport operators, and support wider growth.”
