Removing the current 5p a litre fuel duty cut would harm economic growth and drive up prices, Logistics UK has warned the Chancellor.
The business group has made a pre-Budget submission to the Treasury, outlining its concerns that increasing duty could drive inflationary cost pressures while forcing up prices for businesses and thereby consumers. It also said that higher costs for the sector could inhibit its ability to continue investing in its decarbonisation.
The temporary 5p cut in fuel duty rates is due to end in March 2025, and Logistics UK’s Treasury letter calls for the cut to be maintained for a further year as it warns that the sector will have no choice but to pass increased costs on.
David Wells, chief executive of the industry body, said: “The logistics sector underpins all other sectors and has a critical role to play in driving growth and the new government’s industrial strategy, so now is not the time to increase costs for logistics businesses.”
He added: “We recognise the constrained fiscal situation facing the Chancellor and are confident that the best way that our sector can help the Government manage it is by driving growth; growth that would be stifled by tax increases.”
Alongside fuel duty, road pricing is also in the spotlight ahead of the Autumn Budget as a possible better and fairer way to levy tax while plugging the fiscal black hole from the shift to EVs.
Amid such calls, Logistics UK has said it’s calling in the medium term for a move to a dynamic mechanism for fuel duty that, in periods of inflation, enables the Treasury to keep duty down by taking into account its tax receipts from VAT on fuel.
And in the long term, the logistics industry trade association said it’s keen to work with the Government to help develop plans for the future of transport pricing that ensure it works for the logistics sector and wider economy.
“Any new pricing system must recognise that logistics works as an integrated system across transport modes and operators must be able to make rational decisions to move goods in the most productive, strategic and green way,” Wells stated.
The call to maintain the current fuel duty cut is one of several measures outlined by Logistics UK in its submission to the Treasury.
It’s also set out five priority areas for unlocking economic growth, which include creating a closer partnership between the Government and logistics sector; developing innovative and integrated infrastructure; ensuring a fair transition to becoming a clean energy superpower that rebuilds the UK’s industrial strength; creating a skills partnership to support a thriving sector; and backing trade as a driver of innovation and productivity.
