Fuel duty reversal would deliver £1/2 billion inflationary hit to the economy, says Logistics UK

Ahead of next week’s Budget, business group Logistics UK is warning Chancellor Rachel Reeves of the inflationary impact that reversing the current cut in fuel duty could have on the economy. 

“Logistics businesses rely on diesel to power the delivery of all the goods the economy relies on, every day,” says Kevin Green, Logistics UK’s Acting Chief Executive. “Fuel is an unavoidable cost that our industry must account for when undertaking business, but reversing the current 5p per litre cut would add at least an extra £480 million a year to our fuel bills. At a time when logistics businesses are already battling rising costs and operating on extremely narrow margins (sometimes as low as 1%), this is a charge which, regrettably, would have to be passed on to customers – and ultimately consumers – and would have an inflationary impact on the whole economy. 

“Logistics businesses already pay around £6.3 billion a year in fuel duty, and we are urging the Chancellor to avoid increasing the tax burden on our sector at a time when we are starting to drive the green shoots of recovery in the economy. Any increase in the amount of tax our members pay would have to be passed on to customers in higher prices right across the board, halting any upturn in economic activity in its tracks.” 

As Mr Green continues, logistics businesses underpin every aspect of the UK economy, and it is imperative that next week’s Budget protects the sector’s activities if it is to fulfil its potential to aid the country’s economic recovery and drive growth. 

“As a sector, logistics is critical in ensuring the smooth operation of the whole economy, delivering all that the country needs, every day – nothing moves without it. Currently, our members do not have the financial security they need to invest effectively in new technologies and staff training that will future proof the industry as we move towards a decarbonised future. Increasing the tax burden on our sector at this time would be counterproductive and we are urging Rachel Reeves to ensure the current cut in fuel duty continues at the November Budget.”    

Logistics UK is one of the UK’s biggest business groups, representing logistics businesses which are vital to keeping the UK trading, and more than seven million people directly employed in the making, selling and moving of goods. With decarbonisation, new technology and other disruptive forces driving change in the way goods move across borders and through the supply chain, logistics has never been more important to UK plc. Logistics UK supports, shapes and stands up for safe and efficient logistics, and is the only business group which represents the whole industry, with members from the road, rail, water and air industries, as well as the buyers of freight services such as retailers and manufacturers whose businesses depend on the efficient movement of goods. For more information about the organisation and its work, please visit www.logistics.org.uk.