The 2024 Budget announcement has been widely reported to be a bit of a dud from the wider media, so we asked a handful of experts from within our industry to give their perspective.
Gary Whittle, Commercial Director, Meachers Global Logistics said “Though the Spring Budget offers good news with the fuel duty freeze and NI reduction for employees, we acknowledge there’s a need for more targeted support for our industry. Nevertheless, with our adaptability and determination, we’ll seize opportunities and chart a course toward continued growth and success.”
Paul Hollick, chair, Association of Fleet Professionals: “There’s some mixed feelings here. In a lot of ways, one of the wins this government can claim over the last 14 years is its commitment to electrification, and the impact that its policies have had on the fleet sector in terms of moving to zero carbon emissions have been marked and dramatic. However, the truth is that more assistance in this area is now required – especially when it comes to van electrification where there are fundamental issues to overcome as well the need for a further increased rollout of charging infrastructure – and there was no sign of that help arriving at any time soon. While minor moves such as the continued reduction of fuel duty is welcome, we very much hope to see more from whoever is in power following the next general election.”
Kevin Green, Logistics UK’s Director of Policy, said: “The extension to the 5p per litre cut in fuel duty announced by the Chancellor in today’s Budget is good news for the logistics sector, at a time when the industry is facing increasing cost pressures from rising wage and fuel costs. Logistics powers every part of the economy, and an increase in operating costs at this time caused by the reversal of the fuel duty cut could have caused disastrous inflationary pressure on the economy. Maintaining the fuel duty cut will provide logistics businesses with more certainty as they drive the transition to a greener economy.”
Logistics UK is one of the UK’s leading business groups, representing logistics businesses which are vital to keeping the UK trading, and more than seven million people directly employed in the making, selling and moving of goods. With decarbonisation, Brexit, new technology and other disruptive forces driving change in the way goods move across borders and through the supply chain, logistics has never been more important to UK plc. Logistics UK supports, shapes and stands up for safe and efficient logistics, and is the only business group which represents the whole industry, with members from the road, rail, sea and air industries, as well as the buyers of freight services such as retailers and manufacturers whose businesses depend on the efficient movement of goods.
Barney Goffer, UK Product Manager at Teletrac Navman UK: “While the chancellor promised ‘more investment, more growth and better taxes’, the Spring budget is missing some vital elements for fleets despite a welcome freeze to fuel duty for another 12 months.
The Spring Budget could have been more focused on helping work towards the bigger decarbonisation story and its associated costs.
The lack of reduction on VAT for public EV charging points was a surprise; this will have a particular impact on smaller fleets who rely on public charging for their operation. So while they’ve made the commendable step to decarbonise their fleet, they’re being stung in other areas of expenditure.
Additionally, it would have been good to see more incentives introduced for medium to large fleets, to help them scale up their transition and reach their targets quicker. Switching vehicles and installing on-site charging infrastructure are big investments and without government incentives to help scale them up, businesses are likely to struggle to make the switch.
David Bushnell, Director of Consultancy and Strategy, Fleet Operations: “In the midst of a pivotal election year, the unveiling of the UK Chancellor’s Spring Budget has inevitably garnered widespread attention, not least from the fleet transport sector.
With political tensions high and economic forecasts under keen scrutiny, it will be regarded by many as an indicator of the government’s policy priorities and financial strategies.
The decision to cancel the planned increase in fuel duty, effectively freezing it at its current rate, must be welcomed. The move – in the wake of the biggest monthly rise in fuel prices in five months in February – offers a financial reprieve for the fleet sector amidst considerable economic pressures and the burgeoning challenges of operating fleets in the current economic climate.
However, whilst there will be no additional fuel cost burden for operators of petrol and diesel vehicle fleets in the short term, it is important to highlight that while this measure aids financial planning, it does little to advance the broader objective of transitioning to more sustainable modes of transport.
The long overdue promise of making full expensing apply to leased assets will help support investment into low and zero emission commercial vehicles, but the government has missed a crucial opportunity to encourage electric vehicle (EV) adoption, especially electric vans, by failing to reduce the VAT rate on public charging.
The cost of running EV fleets, particularly those that rely on public charging stations, remains a significant barrier to adoption. A reduction in VAT on public charging could have served as a strong incentive for fleet operators to accelerate their shift to electrification, aligning with the UK’s ambitious environmental targets.
The government’s commitment to environmental sustainability and reducing carbon emissions is well-noted, but the actions to support these commitments, especially in the context of fleet transport, require more work.
The transition to electric vehicles is a critical component of our collective efforts to combat climate change and reduce air pollution. It is essential that policy measures, including fiscal incentives, align with these objectives to encourage a faster and more economically feasible shift towards greener alternatives.
Ken McMeikan, CEO of Moto Hospitality, said: “Freezing fuel duty is good news for drivers, however it’s disappointing that the Chancellor did not go further and introduce a VAT reduction on public charging for electric cars, something we, and many others, have been repeatedly calling for. This is a missed opportunity to make significant strides with EV adoption as it would incentivise more people to make the switch to electric cars. Exempting public charging from VAT ensures that transitioning to EVs is more financially accessible to everyone.
“Encouraging motorists to switch to electric cars will be key if we are to achieve our goals as a nation of decarbonising over the coming decade and the Government has a major role to play in making this possible.”
ParcelHero’s Head of Consumer Research, David Jinks said: “The Spring Budget was more notable for what wasn’t announced than what was, says the home delivery expert ParcelHero. Among expected measures that weren’t announced were business rates reforms, scrapping the tourist tax and cutting VAT for hospitality businesses.
The home delivery expert ParcelHero, a champion of small retailers and SMEs, says today’s Budget was more notable for its deafening silences than what was actually announced.
It says Chancellor Jeremy Hunt’s Spring Budget failed to deliver some essential and widely expected measures that could have made the difference between survival and closure for many SME retailers and small businesses.
ParcelHero’s Head of Consumer Research, David Jinks M.I.L.T., says: ‘This was the Budget that wasn’t, as far as many small businesses are concerned. Hundreds of SME retailers and local companies were waiting desperately for urgent reforms to their business rates, as well as specific tax cuts for those in the hospitality sector and on foreign tourists’ retail spending. It’s distressing that none of these widely expected reforms actually happened.
Business rates reform: ‘The Government has again failed to tackle business rates reform, leaving many retailers and businesses in a state of limbo. Businesses will find it hard to plan for the future until there is a proper solution to the vexed issue of rates. There was a woolly reference to further business rates support, together with £200m more for the post-pandemic Recovery Loan Scheme/Growth Guarantee Scheme. That’s not enough.
‘Business rates are charged on shops, pubs and other business properties based on their rental value. They devour a significant amount of most local shops’ annual turnover. News that film studios in England will get 40% relief on their gross business rates until 2034 is welcome but will do little to help our favourite local High Street stores.
Tourist Tax: ‘The Chancellor also pointedly ignored calls from retailers and business leaders to reinstate VAT-free shopping for overseas tourists. Tourists from overseas were allowed to reclaim the 20% VAT on their purchases in the UK until January 2021, when the tax break was scrapped by then-Chancellor Rishi Sunak. This has resulted in lost income for many stores in tourist areas and has impacted the entire tourism industry.
Hospitality tax cut: ‘Hospitality businesses had been calling for a cut to the 20% rate of VAT charged on pubs, bars and restaurants. The sector’s recovery from the pandemic has faltered significantly in recent months. Many industry leaders had called for a reduction back to the previous 12.5% rate that had helped businesses recover from the Covid crisis. The freeze on alcohol duty will be welcomed but won’t be enough to save many of our favourite pubs and eateries.
‘Of course, there was some good news for Britain’s small traders and manufacturers. The threshold for VAT registration will go up from £85k to £90k. That’s not as far as the £100k some were hoping for, but it’s still good news for many smaller traders.
‘Back in his Autumn Statement, Mr Hunt unveiled a £10bn tax cut for businesses that make capital investments in the UK, known as “full expensing”. Now, following calls from business lobbying groups, he’s revealed that firms will be able to claim tax relief for leased assets as well. However, he ominously added “as soon as the Government can afford to do so”.
‘The £270m to advanced manufacturing industries, to grow “zero emission vehicle and clean aviation technology” will also be good news for businesses such as courier companies that are keen to further decrease their carbon footprints.
‘However, this was the Budget of what was not announced, rather than what was. As such, it will do little to increase the confidence of SME retailers, manufacturers and other businesses, as customers continue to struggle with the cost of living.
‘As retail settles to a new equilibrium, it will be those retailers with strong in-store and online sales that will ultimately triumph after a concerning start to the year. ParcelHero’s influential report “2030: Death of the High Street” has been discussed in Parliament. It reveals that, unless retailers develop an omnichannel approach, embracing both online and physical store sales, the High Street as we know it will reach a dead-end by 2030.
British Safety Council’s Chairman, Peter McGettrick said: “The Chancellor was clearly building on his Autumn Statement with a number of measures to encourage investment in British businesses, intended to support people in work and boost growth. This includes the cut to National Insurance, as well as a new British ISA and changes to help small businesses. There were also further measures to support people with the rising cost of living and a welcome extension of support for those most in need, although we know inflation continues to create a challenging operating environment for businesses and individuals alike.
“Investment announced by the Chancellor to boost NHS productivity and increase capacity in the health system will be welcomed by those awaiting treatment and would help people remain in or return to work. A tax on vapes is welcome if it can discourage more young people from taking up the habit and getting addicted to nicotine, but must be combined with support for people to give up smoking.
“With commitments to improving the efficiency of key public services, we would also urge the Chancellor to commit to ensuring that the Health and Safety Executive and its Buildings Safety Regulator receive adequate funding, through its sponsor body the Department for Work and Pensions, allowing them to fully fulfil their core respective purposes of making our homes and workplaces safer for all.”
