Chancellor Rachel Reeves’ speech today (4 November), which appeared to pave the way for further tax rises in this month’s Budget, has been met with alarm by the logistics and SME sectors.
In her speech from Downing Street this morning, the Chancellor warned that “we will all have to contribute” to the effort to rebuild Britain’s economy. “Each of us must do our bit,” she added.
When questioned, she refused to rule out raising the rates of income tax, National Insurance or value added tax, and pointed to an array of economic challenges facing the country, including inflation, global tariffs, volatile supply chains and defence spending.
Logistics UK responded to the speech by warning that any tax on the logistics sector will dampen growth.
Kevin Green, Logistics UK acting chief executive, said: “Increasing the cost of doing business for logistics companies is counterproductive and will put the hand brake on growth and drive inflation.
“Whether tax increases come from fuel duty, employer National Insurance Contributions (NICs) or business rates, the result will be the same: higher prices for households and businesses.
“Profit margins in the road haulage sector are around 2% and almost 500 hauliers went bust last year. The sector simply cannot afford to absorb any more costs, so a tax on logistics will be a tax on everyone,” he warned.
Richard Smith RHA MD, said if the government wants to generate growth it must avoid piling further costs on businesses and provide more support.
“Our message is clear. We want the Chancellor to support businesses and ease the cost burdens on firms that are crucial to the economy.
“That means flexible training options through the growth and skills levy to future-proof the workforce. It means helping businesses to cut sky-high energy bills.”
Smith also called for a continuation of the fuel duty freeze. He said: “Ministers must resist generating quick revenue from the pumps. The wider impact on businesses and households would be significant.
“For economic growth to happen, the government needs to support the companies and sectors that make it possible.
“Further cost pressures heaped on businesses at a time of already high costs isn’t a recipe for growth.”
George Holmes, MD of business finance specialist Aurora Capital, said Reeves’ refusal to rule out tax hikes creates further uncertainty for SMEs at a time when small businesses were starting to feel more confident.
He added: “If the government walks back a key manifesto pledge within 18 months of taking office, it could stall hiring, investment, and growth plans across the SME sector.
“Small firms can’t make long-term decisions when policy is uncertain. And with cash flow already under pressure, any increase in income tax or national insurance would hit sole traders and small company directors hardest.
A “Budget for growth” cannot be built on the backs of small businesses. If the Chancellor is serious about long-term stability, she needs to support productivity by investing in the SME backbone of the economy, not by taxing it into paralysis.”
