Business rates, fuel duty and emissions: what to expect from the spring budget

Is the road transport industry expecting too much from Philip Hammond’s budget this afternoon? Motortransport.co.uk looks at what's in store for logistics.

Business rates

It is expected that Philip Hammond will announce some relief for smaller businesses faced with increased business rates.

Responding to MPs’ concerns during prime minister’s questions last week, Theresa May said: “There are different effects on different businesses, and it is important that we have already put significant sums into transitional support for businesses so that we help the companies that are facing increased bills.

“I have asked my right honourable friends the chancellor and the communities and local government secretary to make sure the support that is provided is appropriate and is in place for the hardest cases.

"I would expect my right honourable friend the chancellor to say more about this next week in the budget.”

The first reform to the business rates scheme in seven years, which takes effect on 1 April, has led to much concern from the industry over the increasing costs.

Last week Bullet Express MD Dave McCutcheon told Motortransport.co.uk his rates bill would rise 26%, leaving him with costs north of £28,000.

He said: “The haulage industry is sitting on a time bomb. Lots of firms don’t realise what is coming. I urge hauliers to check their rateable values and speak to their local MPs to see if we can get this measure rolled back.”

All transport providers face an increase in the headline national living wage from £7.20/hr to £7.50/hr from 1 April, as confirmed in the previous autumn statement.

Fuel duty

The RHA joined FairFuelUK's (FFUK) long-standing call for a cut in fuel duty ahead of the budget, instead of continuing the seven-year freeze on the rate.

The association argued the current fuel duty rate of 57.95ppl undermines the competitiveness of the UK economy and that lowering it was the only way to protect it.

RHA chief executive Richard Burnett said: “Fuel alone accounts for up to a third of an HGV’s running costs. A modern 44-tonne artic will give approximately 8mpg and typically cover 73,000 miles a year.

“To do that, it will use 41,483 litres of diesel at a cost of £39,496 (plus VAT) and every penny increase – either in fuel duty or the price paid at the pump, adds more than £400 a year to its operating costs.”

FFUK has long-called for a 3ppl cut in fuel duty, which it reiterated last week ahead of today’ s budget.

Charlie Elphicke MP, chairman of the FFUK All-Party Parliamentary Group, wrote an open letter to Hammond on the subject. It said the 3ppl cut would boost profit and wages across the country.

Emissions

The government should incentivise the uptake of greener vehicles, particularly smaller businesses, according to accounting firm Menzies.

Head of logistics Mark Perrin said: “The government’s focus on clean air zones, which will restrict the movement of diesel vehicles, is a major challenge for the transport and logistics sector.

“Tax incentives are needed to encourage UK operators to purchase cleaner vehicles. In particular, smaller operators need extra support to avoid being caught out by the introduction of clean air zones and tax incentives would help them to fund fleet renewals.”

Elphicke’s letter to Hammond asking for a fuel duty cut also called for any emission cutting strategies to avoid penalising hauliers.

It read: “The forward-thinking UK haulage industry has made massive contributions to cleaner emissions with the latest Euro-6 vehicles helping to massively reduce NOx and particulates across the UK and in our cities.

“It has, however, been unfairly cited as a significant contributor to air quality when buses, other public transport sources and industry machinery have been ignored."

Infrastructure

Pressure is mounting for boosted and continued investment in the UK’s road infrastructure, amid regular reports of issues such as congestion, potholes and general disrepair.

Last month, FFUK argued that spending the same amount on the road network as the £55.7bn earmarked for HS2 would deliver four times the economic growth.

A report commissioned by the campaign suggested that with UK road traffic expected to increase by more than 31% from 2013 to 2030, congestion will cost the UK economy £307bn in that period unless the government increases road funding.

Elphicke said: "It's clear that investing in roads will cut pollution and drive Britain's economy forward. Gridlock is a major cause of road pollution. Congestion clogs up the economy and delays the hardworking truckers and van drivers who are the lifeblood of our nation.

“France has built 20 times more new motorways than we have in recent years. It's time we caught up."

Perrin added: “£2.6bn was committed during the autumn statement, but this is not enough.

"UK infrastructure requires significant investment to bring it up to standard and more importantly, to future proof it to accommodate more traffic and pave the way to driverless motoring and smart motorways.”