Kate Jennings, Director of Policy at Logistics UK, said: “Logistics UK welcomes government’s actions to help address growing business costs, namely energy prices. Additional measures announced today, such as changes to IR35 and National Insurance contributions, will give logistics businesses, including SMES, welcome flexibility.
“Investment zones to support further industrial and commercial developments nationwide are a positive step. Logistics is a growing sector, which already supports many of the ‘levelling up’ regions of the UK. To maximise the potential growth opportunities of these zones, it will be important to include the logistics industry in the delivery of these proposals.
“However, there is a missed opportunity on fuel duty. Even with the changes announced this morning, energy - including fuel costs - will be rising to 28% of business costs over the next year. Diesel is the single biggest operating cost for logistics businesses, which drive all sectors of UK PLC. In the six months to 1 July 2022, diesel costs for operators rose by almost 50%.
"As a result, Logistics UK has consistently called for a further 6p per litre cut, which it estimates would result in an average saving of £2,830 per year, per 44-tonne truck. For the 99% of the road logistics industry who are SMEs, they may have no choice but to pass on these costs to consumers and for key workers, including those who work in logistics, the cost of travelling to work is a major cost-of-living issue.”
Road Haulage Association MD Richard Smith also welcomed several of the measures announced and the commitment to encourage business investment, reduce taxes on jobs and relieve cost pressures.
“The biggest issue facing hauliers and coach operators is the cost of fuel and energy. The energy bill support provided in the next six months will act as a lifeline for many – however, we will be urging for this to be extended.
“Fuel costs are driving the cost-of-living crisis, increasing costs in the supply chain and the price of goods for everybody. Ahead of the next full Budget, we urge the Chancellor to introduce targeted support – an essential user rebate of 15ppl for hauliers and coach operators, in line with many other European countries.
“It is good news the planned Corporation Tax increase has been scrapped. Many small operators will benefit from the reversal of the National Insurance increase introduced in April, at a time when they are facing major cost pressures and high inflation.
“Keeping the Annual Investment Allowance at £1 million will be good news for vehicle operators considering upgrades to their fleets and machinery, giving them the confidence to push ahead with investment.
“The proposals for investment zones have potential benefits for our members and we look forward to seeing further details.”
But Howard Cox of FairFuelUK was scathing in his response to the plans, especially given there was no reduction in fuel duty, labelling Kwasi's mini-Budget as a “disaster for the economy, drivers and the logistics industry".
"Liz Truss and Kwasi Kwarteng should hang their fiscal heads in shame by not cutting Fuel Duty. Frankly this is the economics of an asylum. Their ignorance is jaw dropping!
“Low income families, small businesses and the economy will continue to be crippled by high pump prices, punitive fuel duty levels and opportunistic profiteering in the fuel supply chain. Neither have been addressed by this continuing atypical Tory administration.
“I am disgusted that yet again drivers are being used as the Government’s cash cows. No promise of keeping Rishi Sunak’s 5p cut in duty and not matching the significant fuel duty cuts across Europe.
“It seems the Prime Minister is to continue Boris Johnson’s anti driver policies and grass root voters who rely on their vehicles to survive.
“Net Zero will bankrupt the UK and the nation’s drivers will remain one of the highest taxed in the world on the back of a virtual signalling green ideal.
“No reduction in fuel duty means the economic trend growth aspiration of 2.5% per year is unlikely to be hit. It can’t be achieved without lower business costs. One of the largest is the price of transportation that significantly impacts on inflation and the cost-of-living crisis for all of us.
“Cutting the cap on bankers’ bonuses may attract more financial companies and investment in the UK. But cutting the costs of transport will attract manufacturers and other businesses to work from the UK, too. It really is a no brainer. Why has the Government failed to recognise that for decades and is continuing to do so?
“Inflation fell by 0.3 per cent last month. The reason for this welcome drop, despite food prices still climbing, is almost entirely due to a 10p fall in pump prices in August.
“Making a big cut in fuel duty would drive inflation down immediately and it could have been done by using the extra £3 billions in VAT the Government has received from recent very high pump prices. It would have reduced the huge burden on families and businesses and also boosted tax revenue to the Exchequer from the growth in the economy that would have come as a result.
“Liz Truss ignores drivers views at her peril. Voters will leave the Tory Party in their millions.”
The UK Warehousing Association (UKWA) broadly welcomed the plans, including the additional news of a new £55m fund to support energy transition for UK’s industrial sector.
According to UKWA CEO Clare Bottle, the focus on the potential for reducing industrial greenhouse gas emissions through switching to more sustainable technologies, enabling UK industry to reach net zero, chimes with UKWA’s recent report on solar power in warehousing, which showed that by embracing solar power the sector alone would be capable of doubling UK’s solar capacity, saving billions of pounds in electricity costs and millions of tonnes of carbon emissions.
“Based on our research findings, we have prepared a policy paper on the potential benefits and barriers to implementing solar PV on warehouse rooftops across the UK, so we are encouraged to see that support for industry to transition to sustainable and more secure energy supplies is clearly on the Government’s agenda
“In the short term, the six-month Energy Bill Relief Scheme (EBRS) designed to protect non-domestic energy users from rising energy bills this winter was expected and is welcome. UKWA looks forward to future updates on potential further support from Government for industry after March 2023.”
Other measures announced as part of the Government’s Growth Plan, includes new legislation (the Planning and Infrastructure Bill) to accelerate delivery of major infrastructure projects across England, aimed at ensuring energy infrastructure, gets built more quickly.
While this is good news for the sector, Clare Bottle said that UKWA is still determined to highlight the need for further planning reform on land use to facilitate the development of much-needed additional warehousing space close to population centres.
“It remains to be seen whether the plans for Investment Zones will help unlock additional warehouse development, although the various tax incentives being considered, such as 100% business rates relief and Enhanced Capital Allowance for qualifying companies on plan and machinery assets – would represent major benefits for new and expanding warehouse operators.”
She said that the potential Employer National Insurance Contributions relief being considered for companies within Investment Zones would be helpful to the industry in combatting labour shortages and low pay and proposed Stamp Duty Land Tax for land and buildings bought for use or development for commercial purposes would support the growth of warehousing, albeit only within the designated zones.
“We understand that the Department for Levelling Up, Housing and Communities, under which responsibility for warehousing falls, will shortly set out more detail on the Government’s planning offer. Hopefully, this will include detail on the level of deregulation and the streamlined mechanism for securing planning permission.”
Clare Bottle concluded: “There is much in the Government’s Growth Plan that is helpful to our sector, including the extension of the Annual Investment Allowance (AIA), which will support business investment and make tax simpler for any business investing in plant and machinery. We have yet to see all the detail around the proposals for Investment Zones – and the devil is always in the detail – but we are particularly pleased welcome the Government’s commitment to energy transition and stand ready to work alongside policy makers and implementors to accelerate the journey towards cost-effective, affordable, sustainable, and secure energy alternatives.”
Retailers and manufacturers need be wary of ‘Devil’s bargain’ mini-budget, warned ParcelHero’s Head of Consumer Research David Jinks.
“Chancellor Kwasi Kwarteng’s ‘slasher movie’ mini-budget has taken a chainsaw to planned tax increases, EU environmental and regulatory rules and limits to bankers’ bonuses… many of the announcements will be welcomed by retailers, manufacturers and their logistics partners, but they come at a high price.:”
“Of course, businesses will welcome the new Energy Relief Scheme that will discount gas and electricity prices. Energy costs have been top of manufacturers’ and retailers’ concerns for some months. However, the temporary six-month scheme won’t be of much help to companies finalising their plans for 2023. A two-year deal, equivalent to that given to domestic customers, would be vastly more constructive and encourage businesses’ investment plans.
“‘The cancelling of the planned corporation tax increase and confirmation that the Annual Investment Allowance will be made permanent is good news for many organisations. However, other key new measures have a dark side for all those manufacturers, retailers and delivery companies which have been diligently reducing their carbon footprint and greening their operations in recent years.
“For example, the creation of Investment Zones looks to be a Devil’s bargain. These new business-friendly areas will give tax incentives and 100% business rates relief on newly occupied premises. That’s very tempting for manufacturers and logistics companies, but the zones rely on what the Chancellor’s new Growth Plan calls “planning liberalisation”.
“The Government states: “Planning applications will be streamlined and we will work with sites to understand what specific measures are needed to unlock growth, including disapplying legacy EU red tape where appropriate.
“The UK’s planning rules, often constructed around EU regulations, have grown up over time to strike a balance between the needs of businesses and the environment. Businesses that have sunk money into ensuring their operations are far greener than they were a decade ago, for example by switching to electric vehicles and embracing recycling, should be wary of this slashing of green regulations. Such developments may also face a considerable public backlash”
“There was considerable focus in Chancellor Kwarteng’s statement on infrastructure development, which is excellent news for businesses and their transport partners keen to end logistics bottlenecks and ensure swift deliveries. The new plan lists rail and road projects that will help ensure Britain keeps on the move.
“However, once again, these plans come at a potentially heavy price to the environment. The Growth Plan states that new legislation will need to be brought forward to address planning “barriers” by reducing “unnecessary burdens to speed up the delivery of much-needed infrastructure.
‘The measures will include, in the Government’s words, ‘reducing the burden of environmental assessments; reducing bureaucracy in the consultation process; and reforming habitats and species regulations; and increasing flexibility to make changes to a DCO [Development Consent Order] once it has been submitted.
“For any business that is conscientious about its environmental impact, this is a concerning list of measures that will leave many greener businesses uneasy about the true cost of these plans.
“This mini-budget was big on tax cuts, but small on targeted help for UK retailers. A genuine price cap on energy costs to ensure bills don’t rise by more than an agreed percent over last year would be far more welcome than the uncertainty surrounding a six-month cap on the price per kilowatt hour.
“Retailers had also been hoping for more news on business rates and a cut in VAT. Business rates were notable by their absence from the new Growth Plan, except for the controversial Investment Zones’ 100% relief. That’s of no help to High Street retailers.
“Similarly, there was no news about a VAT cut. Many analysts had predicted a reduction in VAT from 20% to 15%, but that didn’t happen.
“However, the plan does include the return of VAT-free shopping for overseas visitors. The Government says that this will provide a boost to the High Street and create jobs in the retail and tourism sectors. Once more though, the devil lurks in the detail. The move will necessitate the introduction of a new digital VAT-free shopping scheme.
“The Government says: “A consultation will gather views on the approach and design of the scheme, to be delivered as soon as possible.” Rather than ending faff and red tape, this sounds like a potential source of new expense and bureaucracy for smaller retailers.
Jinks concluded: “The Chancellor’s mini-budget delivers some much-needed help for British businesses, but it’s a double-edged sword. The price of these reforms, both in terms of costly damage to the environment and the dent in the national coffers they will create, could mean businesses pay a high price for short-term relief.”
Marco Forgione, Director General of the Institute of Export and International Trade (IOE&IT), was upbeat on the new direction.
“We largely welcome the fiscal plans set out by the Chancellor today, which have particular benefit for our business members in relation to the Energy Bill Relief Scheme. The cuts to energy bills for UK businesses are lifejackets to our members in what is undoubtedly a stormy period.”
But Forgione added that the chancellor had missed some opportunities to help UK businesses.
“The offer of VAT free shopping for overseas visitors will help UK retailers, but businesses also need help with VAT and business rates. We continue to call for the government to establish a task force to support MSMEs with their particular challenges, and to include them in the assessment of vulnerable businesses which will have continued support after the winter,” he added.
“We congratulate the Chancellor on reversing National Insurance increases, which will support economic growth. And we agree that there is an urgent need to stimulate growth and investment in the UK.
“At the Institute, we have recognised this and recently launched a Foreign Direct Investment Centre of Excellence to support this agenda. Improving the efficiency of trade, through progressive innovation, such as digital trade corridors, can only serve to boost economic growth further. Utilising the UK’s strengths, acknowledged by the Chancellor, in finance, life sciences and technology, will be vital for negotiations on future Free Trade Agreements.
“Finally, we are encouraged by the announcement of the planned 38 investment zones in England. We have already seen this model work well in freeports and the Institute wrote to the Prime Minister whilst she was running her leadership campaign to ask her to 'encourage the continued development of freeports and the wider use of trade facilitations and digital trade corridors to link nations and industry sectors'.
“We are therefore very pleased with this outcome and look forward to the positive effects of these investment zones. This is a key step forward for levelling-up and we urge the government to look closely at linking regional skills agendas with the designated areas.
Forgione concluded: “Breaking down ‘barriers to enterprise’ will mean, by necessity, breaking down barriers to trade. We look forward to working with the government constructively on this in the future.”