Home >Rising costs for logistics industry highlighted by Autumn Statement

Rising costs for logistics industry highlighted by Autumn Statement

18 November 2022

Total business rates paid by the retail sector are estimated to fall by 20%, but for large distribution warehouses business rates will rise by 27%.

This measure has been long awaited and Jeremy Hunt mentioned it in the Chancellor’s Autumn Statement. The Government is seeking to address what is described as a tax burden imbalance between online retailers and bricks and mortar retail sales.

UKWA chief executive Clare Bottle has branded the intended increase in business rates for warehouses ‘unfair’.

Ms Bottle commented: “The changes in business rates are intended to reflect the growth of the online sales sector, but not all warehouses are involved in ecommerce. What’s more, eCommerce is seeing a downturn since the end of the COVID lockdowns.”

She added: “Retail shops on the high street, who are seeing a fall in bills, will get the full reduction as a result of transition relief reforms. Online marketplace warehouses, on the other hand, will pay higher bills, because of the revaluation, even though our sector has seen bills go up, including increased wages, energy costs and equipment like MHE and racking. Warehousing is facing a disproportionate increase in business rates.

“The transitional relief is intended to make increases more manageable, with caps at 5%, 15% and 30% for small, medium and large properties. But most warehouses fall into the latter category... and therefore could still potentially be seeing up to 40% increases in their rates bills. The 30% cap is very high and not of huge benefit to most logistics properties. This is a big disappointment and simply not fair.”

Fuel duty 

A proposed 23% increase in fuel duty, which equates an additional 12p per litre of petrol or diesel at the pumps, mentioned in the content of the Office of Budgetary Responsibility (OBR) Report on Fiscal Responsibility, published with the Autumn Statement, would be a body blow to the logistics industry if introduced, according to Logistics UK.

Chief executive David Wells OBE is alarmed that a proposal of such significance was not discussed in the Chancellor’s fiscal statement made in the House of Commons earlier, and is concerned about the potential impact of its introduction: 

“Logistics is at the heart of all economic activity in this country, and relies on fuel to facilitate its work, whatever the mode of transport used. Bulk diesel prices have increased by 30% since January. With businesses already under financial pressure, and operating on very narrow margins, a duty hike of this magnitude would have significant impacts, for operating costs and, ultimately, on inflation.  

“Although outlined in the Spring financial statement, the fact that the detail of this policy was hidden in the body of the OBR Report and not announced by the Chancellor in the House earlier indicates that the government was hoping to avoid scrutiny on the topic. We are seeking urgent clarification as to whether the duty rise will be implemented as planned, as a rise of this magnitude would have a detrimental effect on the UK’s economy, stifling activity and placing unnecessary pressure on a sector deemed ‘essential’ only a year ago.” 

The proposed rise in fuel duty would equate to an additional £4,850 for the cost of running a 44t truck, according to Logistics UK’s calculations, bringing fuel duty costs to a total of £26,246 per vehicle, before the cost of fuel itself. Logistics UK estimates that a small haulage firm with seven HGVs (98% of logistics businesses are SMEs) would have £34,000 pa added to annual operating costs if the duty rise were to be introduced after March 2023.