Increasing fuel duty would harm growth, Logistics UK warns Reeves

Wednesday 14 August 2024

With Chancellor Rachel Reeves undertaking a full review of public finances ahead of the autumn budget, business group Logistics UK is urging her to protect the current rate of fuel duty to ensure that the industry can play its part in driving economic recovery.

“Fuel is the largest single expense that logistics businesses have to bear,” says Logistics UK’s Policy Director Kevin Green, “and the current rate of fuel duty is enabling the industry to start planning for a decarbonised future. With the sector already operating on extremely narrow margins – often only 2.5% - increasing fuel duty would heap the cost pressure on operators. This would not leave enough spare cash for our industry to implement the necessary steps to take us into a Net Zero future without passing on the cost to the end customer, something our members are loath to do.

“With wage costs and the price of new vehicles rising, pressure on the logistics industry continues to mount, at a time when the sector is committed to helping kickstart economic recovery and growth. Rather than stifle the increased economic activity which our industry is able to drive, we need Ms Reeves to consider other alternatives to fill the fiscal gap.

“Increasing fuel tax would be a double whammy to millions of car drivers, paying more for their journeys, and more for everyday products, as the logistics industry would have little choice but pass its increased fuel costs on to consumers."

Current industry estimates suggest that the weekly fuel bill for a 44 tonne diesel HGV is around £888, with £436 taken in fuel duty by HMRC. 

“Nothing moves without logistics and our sector is a key driver for growth and productivity,” continues Green. “We have a great opportunity to help kickstart the economy but this opportunity will be stifled if logistics businesses cannot create profit to invest in the future of the sector. Our industry underpins every sector of the economy, and as such is ideally placed to help the government get growth moving, but this cannot happen if the sector is placed under such significant cost pressure. On behalf of our members, we urge Ms Reeves to protect the current rate of fuel duty and identify other areas within the budget which will not hamper the movement of goods which UK PLC needs to trade and use in order to thrive.”

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 decarbonisation, 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.