A freeze on fuel duty and extending the HGV VED holiday announced in the Budget were widely welcomed by the industry, but it offered little in the way of substantial support for hauliers crippled by runaway operating costs.
Chancellor John Healey said the 5p/litre discount on fuel duty would continue until at least July and the temporary £1 VED rate for lorries would remain in place until June, saving operators around £600 per vehicle.
The RHA and Logistics UK said the fuel duty freeze offered businesses some relief, but RHA MD Richard Smith said Ministers should have gone further:
“Transport firms are still facing huge cashflow pressures, paying an extra £385 a week per vehicle on fuel, with 85% of businesses in our recent survey reporting reduced margins,” he said.
“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.”
John Bell, senior partner at insolvency practitioners Clarke Bell, said retaining the cut would not solve the cash flow pressures hauliers were facing.
“We’ve identified 641 haulage and removals companies entering liquidation in two years, including a surprisingly large number of long-established operators,” Bell said.
“More than four in ten had traded for over a decade. When fuel, wages and borrowing costs are already eating into margins, avoiding a further tax rise is only part of the picture.”
Estate agents Knight Frank said the Budget would keep lorries moving, but there was little to stop other costs piling up behind operators.
Claire Williams, partner and head of UK industrial research at Knight Frank, said: “The minimum wage rose a further 4%, and UK manufacturers and logistics operators still pay among the highest energy costs of any major economy, while international competitors enjoy materially cheaper power.
“The British Industrial Competitiveness Scheme’s 25% electricity discount will be welcomed by manufacturers, but tight eligibility criteria, covering what firms produce and how much energy they use, will limit the number able to benefit, and the logistics sector won’t qualify at all.”
The Chartered Institute of Logistics and Transport (CILT) demanded greater support for freight electrification following a Budget that provided no substantial new commitment to accelerate the provision of HGV-suitable charging infrastructure.
The institute warned that high electricity costs and limited grid connections continued to undermine the investment case for zero-emission vehicles.
Daniel Parker-Klein, director of policy and communications at the CILT, said: “We need to look beyond immediate cost pressures and ensure businesses have the confidence and practical support to invest in sustainable transport.
“But high electricity costs and limited grid connections continue to make investment in electric vehicles, charging facilities and electric rail services challenging – and most importantly less appealing.
“If we want a more resilient and sustainable economy, companies and organisations need to be attracted to cleaner energy with the necessary pull factors.”
