Fuel duty freeze aids economic growth but concerns remain over tax increases

Despite speculation Rachel Reeves was poised to reverse the 5p cut in fuel duty brought in by the Conservatives and due to end in April 2025, she decided to keep it in place for another year.

The RHA and Logistics UK said hauliers were the key to economic growth and the last thing they needed amid soaring operating costs and tight margins was a rise in fuel duty.

“The sector is vital to any plans to stimulate growth across the economy, and this respite is welcome news for a sector already seeing increasing business failures over the last year,” said David Wells, CE of Logistics UK.

“Logistics powers every part of the UK’s economy – it is the UK’s system for growth – and this announcement should drive confidence in our sector’s ability to deliver for its customers.”

The Chancellor said an extra £500m would be spent on highway maintenance to fix the crumbling road network, which was also widely welcomed, although business groups cautioned that it was a drop in the ocean of what was required.

“With a one-time catch-up cost of £14.4 billion in England alone, this additional allocation is a fraction of what’s needed to prevent further decline,” said David Giles, chair of the Asphalt Industry Alliance.

“We know from our ALARM survey that conditions are at an all-time low, and that this is the result of decades of underfunding.”

The RHA said the rise in employers’ national insurance to 15% would make hiring staff and creating jobs harder and that more than 95% of the industry were small and medium sized companies who could not afford more costs.

RHA MD Richard Smith said: “We want the policymakers to work with us to minimise the financial burden placed on businesses, not add to them.

“We therefore welcome the Chancellor’s commitment to increase the employment support allowance for small businesses by a record amount, more than doubling it from £5,000 to £10,500.

“Increasing the minimum wage above inflation will impact all costs within the supply chain and businesses will have to accommodate this increase against a challenging economic backdrop.”

The Cold Chain Federation (CCF) described the Budget as one of the biggest tax hikes in the last 20 years, but added that it could have been worse.

“A £40 billion increase in taxation, where we see businesses directly contributing £25 billion to increased national insurance, is concerning,” said CCF CEO Phil Pluck.

“Especially so when you consider an increase in the national minimum wage and possible increases in borrowing rates due to pressure on inflation due to new fiscal borrowing rules.

“It all adds up to a message to industry and the cold chain sector that says the country is in a financial mess, so we expect employers to dig us out of this. Our message back is, ‘We already are, we have been for many years and now is the time to recognise our contribution, not penalise it.’”