With the Spring 2023 budget looming, Logistics UK has raised concerns to the government and provided recommendations to ensure fuel duty cuts are maintained. This comes on the back of the publication from the Office of Budgetary Responsibility that was released with the autumn statement. The report on Fiscal Responsibility suggested that there could be a 23% increase in fuel duty in spring 2023.
Concerns for Truck Drivers
In March 2020, there was a 5p per litre fuel duty cut, which was welcome given the soaring costs of fuel at the time. However, there are now fears that there will be a rise in fuel duty, disproportionately in the UK. If the 23% was to go ahead, truck drivers could see an annual fuel increase of £4850 per each 44-ton truck operated. There are concerns that this would put untenable financial pressure on small haulage companies and even medium-sized businesses because just seven trucks would add up to a £34,000 a year operating cost increase if the cost were levied.
Pressures from All Sides
Speaking about the financial challenges facing hauliers and other truck operators, David Wells, who is the CEO of Logistics UK, raised concerns about increases on all sides. Total vehicle operating costs have already risen by 12.6% for the year ending the first of October 2022, and this does not look set to stop. He also explained that some of his members who had tried to get on board with the government's wishes and began using electric vehicles and green fuels were also facing extortionate costs. Obviously, the cost of electricity is rising rapidly, and it can be in the region of £1 million to install appropriate electric charging facilities in depots. This is very frustrating as it seems that no matter what fuel is used to power vehicles, companies are looking at financial hardship.
The Heart of the Economy
It seems crazy that the logistics industry is struggling so much because the UK economy would collapse without it. It is the backbone of each sector as it is responsible for ensuring that everything needed across the nation is delivered. Yet, with the financial challenges, the profit margins are so narrow, and in some cases, they have been estimated at less than 1%; any further increase could cause companies to go into administration and close. In addition, they knock on the effect of any fuel duty increase in consumer prices, and these already increased by over 10.5% in 2022. With a focus on net zero, it seems crazy to increase fuel duty and, therefore, potentially tie up funds supporting the businesses in the logistics sector when greener technology investments would be a far better focus for time and money. It could also mean that the UK fails to meet the decarbonisation targets because companies simply will not be able to afford to make the transition.