Spring Budget - the industry reacts…

Barry Byers, MD, Pall-Ex Group UK

The budget changes released today have been rather underwhelming although there have been a few useful snippets. The cut to National Insurance will mean that consumers will have slightly more money to spend which may support volume and revenue growth going through transport companies on a nationwide basis. There has been no change in fuel duty with the 5p cut implemented in March 2022 remaining in place.

The rate at which transport companies in the UK are going out of business has been alarming and that is likely to continue until we stimulate growth. These changes announced will only have a minor impact. Transport companies require economic growth and for the volume of goods being transported to increase demand. At present we have too much spare capacity and that drives pricing down as they fight for what volume is there. This is a negative spiral and is forcing more companies out of business. The projections in GDP growth are an improvement but somehow the government needs to accelerate this process to increase confidence and consumer spending sooner than the current projections.

Richard Smith, MD, RHA

We are pleased to see the Chancellor has listened to our calls to help haulage, coach and van businesses. Continuing the freeze on fuel duty and maintaining the 5p-cut for a further 12 months will help firms deal with economic challenges.

The decision to extend full expensing to leased vehicles and assets should prove a significant support to hauliers and coach operators, particularly those affected by higher interest rates. We are delighted the Chancellor has listened to our calls to extend this opportunity to more commercial vehicle operators.

We are however disappointed that the Chancellor missed the opportunity to provide direct short-term support for operators. With record numbers of haulage firms collapsing last year and the trend continuing, many operators were hoping for a temporary suspension of the HGV Levy and VED on HGVs as well as incentives for the take-up of alternative fuels which can drastically reduce tailpipe emissions.

We welcome the increase in the VAT registration threshold from £85,000 to £90,000 and the extension of the Growth Guarantee Scheme until March 2026 as measures to support small and medium-sized businesses.

The Chancellor has made some welcome announcements, but more must be done to support the struggling road transport industry that is so critical to the UK supply chain and economic growth.

Des Evans, transport consultant and author

Today’s budget offers very little for the UK transport sector. The industry needs to see a significant increase in economic growth and a 2% reduction in national insurance will not be the catalyst that is needed.

A fuel tax freeze is welcome but a more innovative change would be to reduce fuel tax on HVO fuel for HGVs that would reduce CO2 by 90% on current Euro-6 units.

A reduction in VAT from 20% to 5% on public EV charging units would also have been welcome but again an opportunity missed.

Finally no mention of a scrappage scheme for any Euro-5 tractor units with a replacement grant for a trade up to either a new or a used unit up to 3 years of age.

This would assist many operators looking to upgrade the fleet and assist many used vehicle sales operations which could soon become over stocked with vehicles coming off fleets that are likely to go into administration some time soon.

The UK HGV transport sector is not a good place to be right now.

Paul Sanders, founder and chair, Association of Pallet Networks

Some small positives for the industry but overall a missed opportunity to support a vital sector which has struggled with rising costs and disproportionate financial burdens.

The APN welcomes the continuation of the 5p cut in fuel duty, as transport businesses are already facing steeply rising costs.

The decision to extend full expensing to leased vehicles and assets should prove a significant support to hauliers, particularly those affected by higher interest rates. And the 2% cut in national insurance may encourage an uplift in consumer spending. Consumer spending has a direct impact of the health of the manufacturing and retail sectors and underpins freight volumes.

However, we would like to have seen the Chancellor go further on fuel duty, offering an essential user rebate for hauliers, or an emissions-linked rebate for the use of alternative fuels. He could also have offered a temporary suspension of HGV vehicle excise tax, or the HGV Road User Levy.

With transport business failures at an all-time high, this was the government’s major opportunity to support the UK transport industry which is critical to our nation’s economic success. 89% of freight in this country is moved by road, with that proportion rising to 98% for food and agricultural products. It is not a sector the country can afford to let languish.

Incentives for skills development in the sector would have been welcomed, despite significant gaps developing in vehicle technician, IT and green skills, as well as drivers and warehouse workers.

Finally, we are disappointed that the Budget did not reduce insurance premium tax which disproportionately affects road transport operators, given the wide array of mandatory insurances they must carry.

Charlie Shiels, chief executive, ArrowXL

Good news for our industry on the fuel duty freeze with the rate being being held for 12 more months.

The draft legislation proposal on full expensing of leased assets will also benefit those with leased vehicles.

The statement that inflation will drop below 2% in a matter of months, as stated by the Office for Budget Responsibility, was good news and caught my eye.

Hopefully the reduction in National Insurance will help stimulate the economy.

Barney Goffer, UK product manager, Teletrac Navman UK

While the Chancellor promised ‘more investment, more growth and better taxes’, the Spring Budget is missing some vital elements for fleets despite a welcome freeze to fuel duty for another 12 months.

The Spring Budget could have been more focused on helping work towards the bigger decarbonisation story and its associated costs.

The lack of reduction on VAT for public EV charging points was a surprise; this will have a particular impact on smaller fleets who rely on public charging for their operation. So while they’ve made the commendable step to decarbonise their fleet, they’re being stung in other areas of expenditure.

Additionally, it would have been good to see more incentives introduced for medium to large fleets, to help them scale up their transition and reach their targets quicker. Switching vehicles and installing on-site charging infrastructure are big investments and without government incentives to help scale them up, businesses are likely to struggle to make the switch.

David Jinks, head of consumer research, Parcelhero

This was the Budget that wasn’t, as far as many small businesses are concerned. The Government has again failed to tackle business rates reform, leaving many retailers and businesses in a state of limbo. Businesses will find it hard to plan for the future until there is a proper solution to the vexed issue of rates. There was a woolly reference to further business rates support, together with £200m more for the post-pandemic Recovery Loan Scheme/Growth Guarantee Scheme. That’s not enough.

The £270m to advanced manufacturing industries, to grow “zero emission vehicle and clean aviation technology” will also be good news for businesses such as courier companies that are keen to further decrease their carbon footprints.

However, this was the Budget of what was not announced, rather than what was. As such, it will do little to increase the confidence of SME retailers, manufacturers and other businesses, as customers continue to struggle with the cost of living.

As retail settles to a new equilibrium, it will be those retailers with strong in-store and online sales that will ultimately triumph after a concerning start to the year.

Mike Hawes, chief executive, SMMT

Government has been keen to assure the UK automotive industry’s competitiveness, with support for EV development and manufacturing – including £2.1bn in autumn’s Advanced Manufacturing Plan – but there is little to help consumer demand. Today’s Budget is, therefore, a missed opportunity to deliver fairer tax for a fair transition. Reducing VAT on new EVs, revising vehicle taxation to promote rather than punish going electric, and an end to the VAT ‘pavement penalty’ on public charging would have energised the market. With both Government and industry having statutory requirements to deliver net zero, more still needs to be done to help consumers make the switch.

Peter Golding, MD, FleetCheck

This was a political Budget concentrating on giveaways to voters, which is perhaps understandable given the proximity of the general election and the current state of the polls. However, there was very little in there for businesses of any kind and especially for those operating fleets, except for the ongoing fuel duty reduction freeze. It really does feel as though our sector is now waiting for what now seems a likely change of government, and the opportunity to engage the new administration in dialogue about what we would like to see from them in terms of future developments in all kinds of areas from electrification to driverless cars.

Paul Hollick, chair, Association of Fleet Professionals

There’s some mixed feelings here. In a lot of ways, one of the wins this government can claim over the last 14 years is its commitment to electrification, and the impact that its policies have had on the fleet sector in terms of moving to zero carbon emissions have been marked and dramatic. However, the truth is that more assistance in this area is now required – especially when it comes to van electrification where there are fundamental issues to overcome as well the need for a further increased rollout of charging infrastructure – and there was no sign of that help arriving at any time soon. While minor moves such as the continued reduction of fuel duty is welcome, we very much hope to see more from whoever is in power following the next general election.