Logistics UK appeals to the Chancellor to maintain current fuel duty, crucial for economic recovery.
- Review of public finances by Rachel Reeves highlights potential economic impact of fuel duty increases.
- Fuel expenses represent the largest cost for logistics businesses, impacting economic planning for the future.
- Raising fuel duties could strain logistics, key to economic growth, by increasing operational costs.
- FairFuelUK suggests a significant planned increase by the government, possibly up to 10p per litre.
The Chancellor of the Exchequer faces pressures not to increase fuel duty this autumn, amidst efforts to address a significant fiscal deficit. Logistics UK, a leading business group, has emphasised that maintaining the existing fuel duty rate is essential for the logistics sector to support economic recovery. Rachel Reeves’ comprehensive review of public finances underscores the potential repercussions of increasing fuel duty on both the industry and broader economic stability.
Fuel is one of the predominant expenses for logistics companies, which operate with notably thin profit margins, often around 2.5%. Such financial constraints make the current rate of fuel duty a vital component in enabling these businesses to strategise for a more sustainable, decarbonised logistics future. Kevin Green, Logistics UK’s policy director, warned that any increase in fuel duty could force operators to pass on additional costs to consumers, which they are keen to avoid.
The prospect of a fuel duty hike presents a dual challenge, as it threatens to elevate transportation costs for both individual car drivers and logistics services. This scenario could lead to a compounded cost burden on consumers, who would face increased prices in goods and services. Green highlighted the logistics sector’s integral role in underpinning and stimulating the economy, warning that excessive cost pressures could stifle growth and investment within the industry.
FairFuelUK, a prominent lobbying group, has reported credible intelligence suggesting the government contemplates a significant increase in fuel duty, potentially up to 10p per litre, in the upcoming October Budget. This anticipated rise could aggravate inflationary pressures, further complicating the economic landscape for businesses and end consumers alike. Removing the five pence per litre reduction previously in place could also exacerbate inflation, as suggested by Logistics UK in its submission to the Treasury.
While Labour has committed not to raise income tax or national insurance, it acknowledges that some tax increases will be necessary, fostering uncertainty across sectors reliant on consumer stability and spending power. The Chancellor’s remarks to MPs in July about difficult fiscal decisions point to substantial budgetary challenges ahead, amplifying the concerns raised by industry stakeholders.
The logistics sector’s plea to retain fuel duty levels underscores its crucial economic role amid looming fiscal adjustments.
