Logistics UK in fuel duty inflation warning

Logistics UK has warned the chancellor Rachel Reeves that reversing the current fuel duty discount could have a significant inflationary impact on the economy ahead of next week’s autumn budget.

Kevin Green, acting chief executive of the organisation, said that reversing the existing 5 pence per litre cut would add at least an extra £480 million a year to the logistics industry’s fuel bills.

“Logistics businesses rely on diesel to power the delivery of all the goods the economy relies on, every day,” Mr Green warned.

“At a time when logistics businesses are already battling rising costs and operating on extremely narrow margins (sometimes as low as 1 per cent), this is a charge which, regrettably, would have to be passed on to customers – and ultimately consumers – and would have an inflationary impact on the whole economy.

“Logistics businesses already pay around £6.3 billion a year in fuel duty, and we are urging the chancellor to avoid increasing the tax burden on our sector at a time when we are starting to drive the green shoots of recovery in the economy.

“Any increase in the amount of tax our members pay would have to be passed on to customers in higher prices right across the board, halting any upturn in economic activity in its tracks.”

With logistics businesses underpinning every aspect of the UK economy, he warned, it is imperative that next week’s budget protects the sector’s activities if it is to fulfil its potential to aid the country’s economic recovery and drive growth.

“As a sector, logistics is critical in ensuring the smooth operation of the whole economy, delivering all that the country needs, every day – nothing moves without it.

“Currently, our members do not have the financial security they need to invest effectively in new technologies and staff training that will future proof the industry as we move towards a decarbonised future.

“Increasing the tax burden on our sector at this time would be counterproductive and we are urging Rachel Reeves to ensure the current cut in fuel duty continues at the November budget.”