Logistics UK ask the government to extend fuel duty cut

Ahead of the 2023 Spring Budget, Logistics UK has submitted its industry recommendations and concerns to the government. In this document, the main concern was the reported disproportionate rise in fuel duty compared to inflation. Logistics UK has proposed retaining the 5ppl fuel duty cut that was introduced in March 2022 in the 2023 Spring Budget.

Fuel duty rates

It was being reported that the government are considering a 23% increase in fuel duty in the upcoming Spring Budget. However, it has been reported in the Office of Budgetary Responsibility Report on Fiscal Responsibility that this rise would result in an annual cost increase of £4,850 to run a 44 tonne truck. With 99% of UK logistics companies being SMEs, this is a massive cost increase per truck to run. For example, a small haulage firm with 10 trucks 44 tonne trucks would see an average total cost increase of £48,500 just in fuel duty increase was to go ahead. To put this into perspective the average salary of an HGV driver is £32,500. This is more than enough money for this example haulage firm to recruit an additional driver. Therefore, this would have a huge impact logistics companies who may be forced to cut costs in other areas to afford the fuel duty increase if it goes ahead.

How would the possible fuel duty increase affect the logistics sector?

Over the last year or so, logistics companies have seen rising prices in vehicle operating costs. Between 1 October 2021 and 2022 operating costs increased on average by 12.6%. The logistics sector is currently one of the most affected by inflation due to huge cost increase in fuel and energy. Increasing fuel duty rates would only enhance this issue during a time where the sector is trying to achieve net-zero by 2035.

How would the increase in fuel duty rates affect the wider economy?

The logistics sector is the backbone of the UK economy. All other sectors rely on the logistics sector to deliver their goods to enable them to contribute towards the economy’s growth. Increasing fuel rates and making life harder for the logistics sector will have an effect on the rest of the economy as a whole. It is being reported that the logistics sector is currently operating on very tight profit margins with less than 1% being reported in some cases. The logistics sector cannot continue to operate on tight profit margins and increasing fuel rates will only result in the logistics sector pushing up the prices to their customers which will affect the margin for the remainder of the economy that relies on the logistics sector to deliver their goods.

How can we help?

Hawsons has a dedicated team of specialist transport and logistics accountants.

We act for a large number of clients in this sector across our three offices, ranging from hauliers to international couriers, and understand the challenges this dynamic sector faces.

Nearly every other commercial sector is reliant on the services transport and logistic businesses provide and, in many ways, this specialist sector is the linchpin for our country’s economy.

With our experience in the transport and logistics sector, we are able to develop a close understanding of your business and, through active year-round involvement, we can help you anticipate and deal with challenges quickly and effectively.