Hauliers reacted positively to chancellor Rachel Reeves move to freeze fuel duty and planned infrastructure investment although voiced concern over tax rises and hike in National Insurance contributions (NICs), writes Peter Brown.
Leading up to the first Labour budget in more than 14 years, fears from industry lobby groups of a potential fuel duty hike proved unfounded as she decided to keep the current level in place for another year.
The chancellor said an extra £500m would be spent on highway maintenance to fix the crumbling road network, which was also widely welcomed, although business groups cautioned that it was a drop in the ocean of what was required.
“With a one-time catch-up cost of £14.4 billion in England alone, this additional allocation is a fraction of what’s needed to prevent further decline,” said David Giles, chair of the Asphalt Industry Alliance.
Barney Goffer, UK product manager at Teletrac Navman, said: “While the frozen fuel duty is a pleasant surprise, the new regulations around NICs are going to be a challenge for many fleets.
“Kickstarting economic growth relies on multiple sectors operating efficiently and cost-effectively – the transport sector being a major factor in this.
“While the decision for employers to pay NIC on anything over £5,000 when previously it was £9,100 could help raise a large amount, it means increased pressure for fleets, especially the transport sector which is already running on low margins to absorb.
“The obvious thing to do would be to pass the rise in tax onto the customer but in a highly competitive transport sector there’s always someone willing to run at even lower margins.”
The Cold Chain Federation (CCF) described the Budget as one of the biggest tax hikes in the last 20 years but added that it could have been worse.
“A £40 billion increase in taxation, where we see businesses directly contributing £25 billion to increased NICs, is concerning,” said CCF CEO Phil Pluck.
“Especially so when you consider an increase in the national minimum wage and possible increases in borrowing rates due to pressure on inflation due to new fiscal borrowing rules. It all adds up to a message to industry and the cold chain sector that says the country is in a financial mess, so we expect employers to dig us out of this.”
