Rising employment costs, largely from higher employers’ national insurance contributions and national minimum wage increases, could have a significant effect on potential investment and business confidence, especially with smaller companies.
Smaller businesses are also expressing concerns over the Employment Rights Bill which is moving through parliament and while we all want to see exploitative practices eradicated, any new legislation must not remove the helpful and flexible working arrangements that suit both the employee and employer.
In this type of environment, we need to make sure that any change does not provoke unintended consequences which is why it is essential for the government to work closely with the sector and it can exploit our famous “can do” attitude to get the economy moving, by addressing the following key areas:
INDUSTRIAL STRATEGY
Nothing moves without logistics and the prosperity of our sector and the productivity of the economy as a whole are completely intertwined. The government’s Industrial Strategy Green Paper identified the highest growth-driving potential sectors and, when the final Industrial Strategy is published in the spring, logistics must be recognised as a foundational sector integral to supporting the expansion of the rest of the economy. I firmly believe that transport and logistics must be embedded into the Industrial Strategy’s objectives, and policies prioritised to support our industry, if growth is to be enabled across the whole economy. As the voice of the sector, Logistics UK is ideally placed to sit on the proposed Industrial Strategy Council, as well as the interim Industrial Strategy Advisory Council, to ensure efficiency and productivity gains across the logistics sector are realised and we are pressing for our voice to be included in the debate.
By establishing the right partnerships, regulations and investment for logistics, the government can deliver productivity gains that will boost the UK economy by up to £8 billion every year by 2030. Considering 1% growth in the UK economy represents roughly £35 billion pa, this is a significant contribution and shows the strategic importance of the sector.
SMOOTH TRADE BY REDUCING BORDER FRICTION
2024 was a monumental year for changes to the UK’s borders, with new procedures implemented following Brexit, such as the Border Target Operating Model (BTOM) and Windsor Framework coming into effect. However, thus far the introduction of the new border controls has been far from smooth, with constant changes to deadlines and lack of clarity over precisely how the new procedures will be implemented. In 2025, logistics operators need the support of the government to ensure that the UK’s borders do not become a barrier to the movement of goods. The government needs to provide the clarity and detail the industry needs to plan and adapt to meet these new trading requirements, in a timely fashion – as the old adage goes, failing to plan is planning to fail, and as the heart of the UK’s trading relationships, I believe logistics deserves to be included from the start of any changes being implemented.
PLANNING AND INFRASTRUCTURE
There were some positive developments at end of last year in this area, including the National Planning Policy Framework (NPPF), announced in December, which recognises the importance of logistics developments to the economy for the first time. The government’s instruction to planners to support the economy, by identifying suitable locations for freight and logistics operations to take place, is a significant step forward for our sector and it is also good news that the updated NPPF calls for local planners to consider the needs of industries of national importance and a role in the national industrial strategy, to support economic growth.
FAIR DECARBONISATION ROADMAP
The logistics sector is already embracing the challenge of achieving net zero; however, we believe a sustainability and decarbonisation roadmap developed in partnership with the government would enable the UK to become a world leader in logistics sustainability. The private sector needs confidence to invest in long-term business development and to do so, requires a supportive, stable policy environment that incentivises decarbonisation. The government must recognise that logistics is comprised of multiple transport modes and infrastructure, meaning a flexible approach will be needed to achieve a fair transition to net zero, while keeping costs down for customers and supply chains resilient.
SKILLS
The sector is still experiencing ongoing challenges with skills shortages in key roles, such as vehicle technicians, and it is critical that the government works with the sector to attract new talent into the profession. The Generation Logistics awareness campaign, led by Logistics UK and CILT (UK) and supported by over 40 businesses from across the sector, started in 2022 and has already had a significant impact on the way young people think about our industry. In its first two years, the activity had driven more than 1.37 million visits to the campaign’s website, generate over 6.9 million social media engagements and created over 1.67 billion opportunities for potential candidates to see messages about careers in logistics. Most importantly, independent research shows that the campaign has raised awareness of careers in logistics among the target audience by 37% and improved the way people think about the appeal of a career in logistics by 212%.
This is encouraging news, but it is only the start of driving a change in attitudes which needs to see logistics embedded in careers education alongside more familiar roles like healthcare, manufacturing and retail. Many other areas of the economy are experiencing similar recruitment challenges to our own, so it is vital that Generation Logistics continues to fly the flag for logistics careers so our industry can continue to attract the very best talent into the vacancies that exist. We are delighted that so many businesses across the sector have already chosen to support the campaign, but our sponsors are only a small sample of the whole industry. If your business is interested in helping to develop the next generation of talent, please email generationlogistics@logistics.org.uk to find out how you can get involved as a sponsor.
In the future the government needs to ensure appropriate funding for training providers, including proper funding of courses for vehicle technicians to address the significant problems of a shortage of people trained for this role. It is also essential to broaden the eligibility for roles in the sector to receive support through the National Skills Fund to ensure the sector has the skilled workforce it needs.
