Energy support plans risk greener future for our industry, says Logistics UK

Friday 20 January 2023

Cutting the Energy Bill Support Scheme will have a significant impact on the ability of the UK logistics industry to plan for a lower carbon future, according to business group Logistics UK. After the UK government’s new Net Zero Review called for more consistent use of incentives to help businesses go green, Logistics UK is raising concerns about the impact of reduced energy bill support for businesses and the risk that a steep rise in fuel duty this spring could place on green investment.  

Responding to the news that the sector’s future energy bills could be impacted by a less than favourable discounted rate when the current energy bill scheme is curtailed, Kate Jennings, the organisation’s policy director, has urged government to use its upcoming Spring Budget to recognise the role the sector plays in driving every part of UK PLC. Speaking today, she stressed that government should consider the potential impact of above-inflation energy and fuel price rises on businesses and consumers. 

“Logistics is at the heart of every sector of the UK’s economy,” she comments, “providing the materials required to drive businesses from manufacturing to hospitality. Our industry is already facing substantial financial pressures from inflation and the prospect of a rise in fuel duty this spring. Further, above-inflation, price increases on energy bills would divert funds our industry needs to invest in the new technology required to transition to a zero-carbon operating model and stifle growth opportunities across the sector.  

“Members have already reported costs of over £1 million for upgrading power supplies to one depot to enable electric vehicle recharging – adding additional costs at this time will stall the transition to greener technologies across the board.” 

In November 2022, Logistics UK raised concerns about a potential 23% increase in fuel duty from Spring 2023, following the publication of the Office of Budgetary Responsibility (OBR) Report on Fiscal Responsibility on the day of the Autumn Statement.  The business group is calling for the introduction of a dynamic mechanism to reduce fuel duty while maintaining revenue levels through VAT and other sources, to ensure government keeps control of the public purse and, at the same time, to enable businesses to plan for the future more efficiently. 

“Our members’ work impacts every single individual and business in the country,” continued Ms Jennings, “as they work round-the-clock to deliver what the nation needs on tight schedules and budgets. Increasing the costs of energy and fuel at this point would have a detrimental effect on the logistics industry’s ability to power the nation’s recovery after the pandemic, as well as enabling our members to prepare for a greener future. 

“The current energy bill scheme, capping the unit cost of gas and electricity for all businesses, provided much-needed certainty for our members, particularly SMEs who make up 99% of the logistics sector. However, the significantly lower discounts to be applied to eligible businesses from the new scheme from 1 April 2023 will be detrimental to further growth and investment for the future, and could even result in business closures. 

“For the sake of the economy, and the logistics industry in particular, Logistics UK is urging government to use its Spring Budget to put forward a package of support that ensures our members can keep the lights on, operations moving and UK businesses trading, while continuing to invest in a greener future.” 

Logistics UK is one of the UK’s leading 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 COVID-19, Brexit, 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, sea 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.