On the 3rd of March 2021, Chancellor Rishi Sunak announced the government’s budget which contained a wide-ranging set of measures that are designed to help Britain recover from the Covid-19 crisis. UK commerce as a whole is getting a big shot in the arm through a number of moves that support growth and a variety of sectors, including logistics and transport will benefit.
The UK’s haulage industry has been something of a silent hero over the last year or so and the good news is that Budget 2021 offers a number of aspects that will benefit the sector as a whole. That’s something we look at here, as we examine some of the budget elements that will provide both much-needed allowances and concessions to the haulage and logistics industry.
Boost #1 – Fuel Duty Frozen
The government had intended to raise fuel duty in April of 2021, but instead Mr Sunak has decided to freeze it again, making it the 11th consecutive year that it has not gone up. This is something that will positively influence logistics and haulage companies in that operating costs will stay as they are for at least another year.
It seems that we should enjoy it while we can, however, as future rates for fuel duty will be determined by Britain’s commitment to achieve net-zero emissions by the year 2050. More money will be used going forwards to fund greener fuel technologies, so we’re unlikely to see another freeze in 2022.
As welcome as this freeze in duty is, chairman of the APPG, Sir Mike Penning MP suggests that more can still be done to help UK hauliers. He said “Our haulage industry will be vital to our economic recovery and the Chancellor must ensure that they are not held back by paying the highest rate of fuel duty in Europe”.
APPG themselves are calling for a rebate of around 15 pence per litre for road haulage operators to bring the UK in line with the most competitive countries like Germany.
Boost #2 – A Freeze in VED for HGVs
Another welcome decision from the budget for the haulage sector is that Vehicle Excise Duty (VED) for Heavy Goods Vehicles (HGVs) is frozen for another year, with a further 12 month suspension starting from August of this year.
Adding to the savings made on fuel, this is another step that makes UK haulage companies more competitive and allows those logistics companies that are yet to reopen a chance of recovering from lockdown that much more quickly.
Boost #3 – 30,000 SMEs to Benefit from Help to Grow
Whilst the government’s ‘Help to Grow’ management training programme is aimed at UK business as a whole, the logistics sector is also able to benefit from it. It’s a scheme that aims to provide ‘upskill’ training to 30,000 businesses to offer those receiving it with the skills they need to better manage and grow their business.
Again, this is a good start, but for UK haulage it’s not nearly enough – something that’s echoed by General Manager of Public Policy at Logistics UK, Alex Veitch who said “Funding to train new entrants to the logistics sector is particularly welcome at a time when the industry is suffering significant skills gaps and the loss of EU workers
However, the industry needs new recruits now. The average cost for a 12-month apprenticeship training and license acquisition is £7,000 – We would like to see more immediate government support, in the form of interest-free loans or grants”.
Boost #4 – An Extension to the Furlough Scheme
The truth is that whilst the logistic industry has done sterling work keeping the country moving during the pandemic, there are many in the sector that are still closed. The decision by the Chancellor to extend the furlough scheme until the end of 2021 is sure to help many fragile logistics operators survive and reopen successfully.
Particularly when talking about logistics companies that rely on sectors like hospitality and retail, the fact that they’ll remain having 80% of their staff wages met by the government is welcome news indeed. It’s something that many employed in the sector will be rightly delighted about.
Further to this, the extension of the business rates holiday until June of 2021 (after which a discounted rate applies) could result in far fewer businesses in the industry going under. By not penalising companies trying to recover, their ability to do so goes up exponentially.
Boost #5 – A Commitment to the Freeport Programme
Something else that will greatly assist the UK’s international logistics industry is the government’s commitment to a Freeport Program, which allows companies to import goods without paying a tariff until they’re sold on the domestic market. 8 new Freeport ‘Zones’ are to be created that offer lower customs, favourable duties, VAT rates and tariffs.
These allowances are created with a view to encouraging economic activities and enticing businesses to open up inside these zones, creating new jobs as they do.
All in All, a Budget the Haulage Industry Welcomes
Whilst it is true to say that some of the measures mentioned above could go further, it would seem that the government is listening to what UK business needs. The fact that haulage intersects many of the industries that power the UK economy means that even those measures not directly relating to logistics will likely also benefit it indirectly.
All in all, we’d have to say that it’s a budget that’s full of things that will stimulate commerce and help many in the logistics and transport sector. Of course, the fight for more HGV drivers to meet the shortfall will go on and the government can certainly do more on that front, but as far as budgets go, there’s much to be pleased about.
The next 12 months are set to represent a challenging, but exciting period as the country wakes up from it’s covid-enforced slumber. Whatever happens during 2021, it’s going to be interesting.
