Budget measures welcomed – with reservations

London, UK: The logistics industry has welcomed most of the measures put forward by Chancellor Rishi Sunak in the Budget but cautioned that labour shortages will remain a problem, fuel duty prices are still high and more details are needed on lorry parks.

Highlights for the sector include a freeze on fuel duty, extending the suspension of the heavy-goods vehicle road user levy, as well as freezing vehicle excise duty until 2023. Sunak also pledged more funding for lorry parks.

The Chancellor said most of the global energy issues and supply chain blockages were outside the UK’s control but “where the government can ease these pressures, we will act”.

Here are some of the reactions:

Logistics UK

David Wells, chief executive at Logistics UK, told the Financial Times that the measures did not even acknowledge, let alone address, how tight the supply of labour is across the UK economy. “Do I see anything in there about the longer term issues? If I’m honest, then no,” he said. “We have to do more to increase the number of available people in the labour market or the economy will be constrained.”

Official statement

“The Budget announcement of a continued freeze on fuel duty will assist the logistics sector in its move to decarbonisation by 2050, according to business group Logistics UK. Elizabeth de Jong, the organisation’s policy director says that the announcement will enable businesses to make the switch to alternatively fuelled vehicles more smoothly. 

“The impact of the pandemic on the economy, and our industry in particular, has made vehicle replacement planning particularly challenging,” she explains.  “The logistics sector traditionally runs on extremely narrow margins, with limited amounts of money available for vehicle purchase – so the removal of uncertainty over fuel duty levels for another year will give our industry time to plan vehicle replacements more effectively.

“Logistics is at the heart of all sectors of the UK economy, and it is encouraging to see many Budget announcements which will help business operations in our industry.  The freezing of HGV excise duty and the extension of the suspension of the HGV levy for a year will make the operation of vehicles more cost effective.  In addition, the continued investment in road and rail infrastructure, as well as in customs and transit arrangements is welcome news which will help goods move smoothly.”

“Logistics UK is pleased to hear the Chancellor’s commitment to improve the quality of HGV parking spaces available. However, as the government’s own figures estimate there is currently a shortfall of more than 1,400 spaces nationally, there is still more to be done.  The business group will remain in close contact with government on this issue, to ensure that the spaces needed are finally delivered, after more than three years of promises which are yet to be fulfilled. This is vital to acknowledge the contribution which HGV drivers make to the UK’s economy and help industry attract new recruits to the sector.”

The Road Haulage Association

“RHA welcomes the latest transport industry acknowledgments from Rishi Sunak in the Budget, particularly the HGV levy (previously suspended until August) and now suspended until 2023; vehicle excise duty for HGVs to be frozen and funding to improve lorry park facilities.

“These are welcome steps for a hard pressed haulage industry battling driver shortages and a range of other cost issues in the supply chain.”

Rod McKenzie, RHA’s managing director told the Mail: ‘Rishi Sunak freezes fuel duty for the 12th year in a row. Every pence per litre increase adds £411 per annum to the operating cost of a typical 44 tonne articulated truck doing 75,000 miles per annum. At 8.3 mpg that’s a big saving. But we’re still paying the highest level of fuel duty rate in Europe.”

The Department for Transport is expected to reveal that £32.5m will go towards improving existing facilities such as shower and toilet facilities and improving security.

The Food and Drink Federation
Ian Wright, FDF chief executive, said: “Food and drink manufacturers – and the farm to fork supply chain – will applaud the moves made by the Chancellor in the direction of a higher skilled, more productive UK economy.

“We support the Government’s Plan for Growth – but its success should be judged on whether it delivers the skilled people that we so desperately need. Today’s Budget does little to address the labour shortages which grip the nation. It was also worryingly short on action to tackle rising inflation. Given the pressures they are facing, many manufacturers will simply have no choice but continue to pass costs down the chain.”

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