The Chancellor of the Exchequer has been urged not to raise fuel duty this autumn as she mulls over how to plug a fiscal black hole.
Rachel Reeves is undertaking a full review of public finances ahead of the Budget in October and Logistics UK said the current rate of fuel duty needed protecting to ensure the industry could help drive economic recovery.
Kevin Green, policy director at the business group, said: “Fuel is the largest single expense that logistics businesses have to bear and the current rate of fuel duty is enabling the industry to start planning for a decarbonised future.
“With the sector already operating on extremely narrow margins – often only 2.5% - increasing fuel duty would heap the cost pressure on operators.
“This would not leave enough spare cash for our industry to implement the necessary steps to take us into a net zero future without passing on the cost to the end customer, something our members are loath to do.”
Green said increasing fuel tax would be “a double whammy”, because car drivers would pay more for their journeys and then the logistics industry would have to pass on their increased costs, leaving consumers paying more again.
“Nothing moves without logistics and our sector is a key driver for growth and productivity,” he said.
“We have a great opportunity to help kickstart the economy but this opportunity will be stifled if logistics businesses cannot create profit to invest in the future of the sector.
“Our industry underpins every sector of the economy, and, as such is ideally placed to help the government get growth moving, but this cannot happen if the sector is placed under such significant cost pressure.”
In a speech to MPs in July, the Chancellor said difficult decisions would have to be made in order to plug a £22bn hole uncovered in the government’s accounts.
Labour has pledged not to increase income tax or national insurance but added that some tax increases will be required.
