Spring Budget: Industry welcomes extension to fuel duty cut but slams weak net-zero strategy

Transport business groups have welcomed news in today's Spring Budget that the 5p-per-litre fuel duty cut originally introduced in March 2022 is to be retained for a further 12 months.

However, there was widespread disappointment over the government's reluctance to help businesses with soaring energy bills or the switch to zero-carbon fleets.

RHA director of public affairs & policy, Declan Pang, said he was pleased that the chancellor had istened to the RHA and continued the fuel duty freeze and maintained the 5p per litre cut brought in 12 months ago.

"This is something we’ve campaigned for to help reduce costs and control inflation," he said.

"However, today’s Budget could have gone much further to support hauliers, coach operators and the logistics industry.

"We are disappointed to see the increase in corporation tax from 1 April as well as the return of the HGV levy from August this year. This is a tax targeted at the road freight industry that economic growth in the UK relies upon."

Pang said he was also concerned that the focus of the HGV levy has been shifted towards CO2 emissions: "The original intention of the levy was to ensure overseas operators contributed to the upkeep of the UK road infrastructure," he said. "If this is no longer the main purpose of the levy, we question its utility at all, given the progress the industry has already made in reducing carbon emissions. The lowering amounts of levy funds recouped as fleets modernise will also need to be addressed.

"The first-year capital allowance for investment in plant and machinery is welcome and we support the measures on encouraging the over 50s back to work through additional skills bootcamps and Returnerships. As the average age of an HGV driver is 52, we already know the benefits they bring to the workforce. We would have liked to have seen more Government efforts into recruiting younger people behind the wheels of trucks and coaches."

Logistics UK chief executive, David Wells said the announcement over fuel duty was "very welcome news for logistics businesses, particularly SMEs – who make up 99% of the industry, and traditionally operate on low margins".

"Logistics UK has consistently urged government to extend this cut, while maintaining revenue levels through VAT and other sources," he said. "This decision recognises the importance of managing logistics costs to avoid further inflationary pressures on business and consumers. This should help to ensure businesses have the funds to invest in productivity, growth and greener technologies, alongside the new policy for full capital expenditure announced as the successor to the super-deduction - providing it encourages the transition to a zero-carbon economy.

“However, Logistics UK is dismayed by the lack of support to help businesses with energy costs and our sector’s transition to a low carbon economy, something which the government has urged industry to commit to. This is a missed opportunity."

Wells added that members would also be concerned about proposals for a reformed HGV road user levy and would be seeking urgent clarification as to the detail involved.

However, he said that while there was no reference to Apprenticeship Levy reform, it was encouraging that government is focused on supporting people into work, helping to relieve the existing skills gaps.

"Logistics UK will work with its members to scrutinise the detail and identify what these measures will entail, such as the announcement of skills bootcamps and Returnerships, and whether these will provide a credible pathway into logistics,” he said.

SMMT chief executive Mike Hawes said he was pleased to hear the Chancellor directly reference industrial strategy and measures to attract investment, adding that tax breaks for capital expenditure, extensions to climate change agreements plus action to alleviate the high cost of living and encourage more people into work are all much-needed.

"Investment zones which focus on advanced manufacturing, of which automotive is an exemplar, R&D and technology are also positive steps," he added.

“There is little, however, that enables the UK to compete with the massive packages of support to power a green transition that are available elsewhere. Indeed, the announced fuel duty freeze contrasts with an absence of measures to boost uptake of zero emission vehicles, such as reducing VAT on public charging. We, therefore, look forward to additional policy announcements that support advanced manufacturing sectors, as the right conditions will enable the investment that drives growth across the country.”

Paul Hollick, chair of the Association of Fleet Professionals, said the budget was "more noteworthy for what it didn’t include rather than what it did".

"We’d have liked to have seen measures announced ranging from the creation of an EV charging regulator through to national co-ordination on Clean Air Zones, as outlined in our recent tax and regulation manifesto," he said. "However, there was little content that showed the Government has been thinking about business road transport.

“The one bright point for fleets was the freeze in fuel duty. An increase in 11 pence per litre would’ve been extremely unwelcome at a point in time when the economy is struggling and removing that possibility is very much welcome.

"Further positives are difficult to identify but a recognition that more people need to be encouraged back into the workforce, through pension changes and childcare measures, could potentially help to a degree in a fleet sector where recruitment remains an issue.”

Added FleetCheck MD Peter Golding: “There’s little of note for fleets in the Budget except for the freeze in fuel duty. While welcome, petrol and diesel prices have been falling in recent months anyway, so this will perhaps largely go unnoticed.

“What is perhaps most disappointing is that no support was announced for the electrification of the UK motor industry. Industry bodies have been calling for this and it really does feel as though the government is letting our car and van manufacturing capacity drift away to other countries that are being more proactive.”

“The policies designed to get people back to work are potentially interesting, especially given shortages of drivers and other key roles in fleet, but whether these will have a noticeable effect in our sector is very much open to question."

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