The Chancellor presented his Budget to Parliament yesterday – here's a summary of the key announcements affecting the freight and logistics sector plus industry reaction and analysis.
£30 billion to improve roads
A £28.8 billion National Roads Fund, paid for by road tax, includes £25.3 billion for the Strategic Road Network (motorways, trunk and A roads). It will also help fund the new network of local roads (known as the Major Road Network), and larger local road projects.
Local authorities will receive £420 million to fix potholes on roads and renew bridges and tunnels, and there will be a £150 million to improve local traffic hotspots such as roundabouts.
Fuel duty will remain frozen
Confirmation that fuel duty will be frozen for the ninth year in a row.
Increasing funding to help departments to prepare for Brexit to over £4 billion
The government is providing £500 million of additional funding for departments to prepare for Brexit for 2019-20. This is on top of the £1.5 billion already announced for that year.
Further changes to the apprenticeship levy to support employers
From April, large businesses will be able to invest up to 25% of their apprenticeship levy to support apprentices in their supply chain. Some employers will pay half of what they currently pay for apprenticeship training - from 10% to 5%. The Government will pay the remaining 95%.
The Road Haulage Association welcomed the news that Mr Hammond has announced that Government will halve the amount smaller firms have to pay to hire an apprentice from 10% to 5%. RHA also welcomed the recognition that the UK road network is in desperate need of a cash injection with the intention to earmark a total of £30 billion for motorways and other major road improvements, including £420 million for fixing potholes to be made available immediately.
“While on the one hand this is both good and welcome news, we need to see work start on improving our road network now”, said RHA Chief Executive Richard Burnett.
“Congestion resulting from road improvements costs the haulage industry millions of pounds each year. We are already heading towards another cold winter and the potholes resulting from last winter’s freezing conditions still need to be fixed before they get even worse.”
Christopher Snelling, Head of UK Policy, Freight Transport Association (FTA), said: “The £420m announced in today’s Budget to repair potholes is a drop in the ocean when you consider that work that will cost more than £8 billion is needed to rectify years of under investment in our road network. The damage caused by potholes to the UK’s logistics fleet is adding unnecessary cost to the operation of vehicles tasked with keeping Britain trading, and FTA is concerned that the funding released by the Chancellor today will mean that operators will continue to incur these unreasonable costs at a time of extreme trading pressure. More could and should have been done to help the logistics sector at such a critical time in the nation’s trading history. It is a lost opportunity.
“The freeze on the Heavy Goods Vehicle HGV VED for 2019-20 is to be welcomed, and FTA is particularly pleased to hear that the Government is set to maintain the difference between alternative and main road fuel duty rates until 2032. This will support the de-carbonisation of the UK transport sector and give operators confidence to invest in alternatively fueled vehicles.”
British Ports Association’s Chief Executive, Richard Ballantyne, said: “Transport investment is important to ports, who rely particularly on roads to connect them to their traders and markets as well as importing some of the materials needed to build them. However it remains unclear if the investment will directly benefit the links to ports themselves.”
Mr Ballantyne continued: “One of our key requests from Government is around increasing public transport investment to help the UK ports and logistics industries compete with international competitors and drive regional economies. Most freight is transported on road and investment in our strategic trunk road network and the links to ports is a must. Earlier this year the Department for Transport published a comprehensive Port Connectivity Study in England. It will be important that this initiative is backed up with investment and that ports feature when spending decisions are made on future rounds of the Road Investment Strategy.”
Finally, on Brexit, Mr Ballantyne said: “We welcome the Chancellor’s announcement to allocate a further £2bn on Brexit planning. However it remains unclear if this will be used to ensure the adequate preparation of borders staff and facilities that may be required for potential new frontier requirements, either at or close to our ports. Finally we note with interest the rather ominous commitment to upgrade the Spring Statement should a ‘no deal’ Brexit outcome materialise.”
The trade association for UK freight forwarding companies and logistics service providers said that whilst it welcomes some of the announcements in yesterday's UK Budget, it feels that the issues covered are all overshadowed by the ongoing uncertainty over the shape that the UK’s exit from the EU is going to take.
Robert Keen, Director General of the British International Freight Association (BIFA) said: “Whilst the investment in road transport infrastructure might make a difference to our members, we should not forget that back in November 2015, the Government announced that funding would be provided for the largest road investment programme since the 1970s.
“I am not sure that the country’s network of A roads and motorways has become any less congested since that announcement.
“BIFA has said repeatedly that it is imperative that new road building and road reconstruction projects are not only implemented, but developed in such a way as to maximise their functionality to the BIFA members, which as freight forwarders, use them to move Britain’s visible domestic and international trade.
“Hopefully this talk of infrastructure investment will cease to be just talk and we will see some spades in the ground.
“Our members will also welcome the news that the freeze in fuel duty would remain, but would have preferred to see an outright cut, the introduction of an essential user rebate and some form of fuel duty stabilisation mechanism."
Notwithstanding any of the above, BIFA is concerned by Chancellor Phillip Hammond’s assertion that the spending commitments outlined in yesterday budget statement would not be affected in the event of a no-deal, hard Brexit.
Keen adds: “If that is the case, why would Mr Hammond feel the need to also state that his Spring statement might need to be upgraded to a new hard-Brexit budget?
“Speaking on behalf of BIFA’s members, which facilitate much of the movement of the UK’s visible exports and imports, we believe that any new tariffs and delays that could result from a no-deal Brexit would make today’s announcements unsustainable.”
“Our business sector is an accurate barometer of the nation’s trading performance, and wants to see a Brexit deal as closely aligned with the EU Customs Union as possible.
“Our members remain concerned about the potential impact on infrastructure plans, labour shortages and border delays of a no-deal Brexit, and want to see much more progress with the agreement on several key processes if a frictionless border is to be achieved.
“Our members want to see the government achieve an agreement on trade and customs as an urgent priority.
“That will be of much greater importance to the work of our members than anything announced in yesterday’s budget.”
Ian Baxter, chairman of Baxter Freight, employs over 60 staff from its Nottingham-headquarters in the UK. The company relies on trading with the European Union.
Mr Baxter said: “What we have learned from the Chancellor’s Budget announcement is that he really isn’t planning on a no deal Brexit which may be the biggest thing to cheer of all his announcements! Nor does the Government have an adequate plan to deal with the directly foreseeable consequences of leaving the Customs Union whether in March or at the end of a transition period. Let me be clear: both of these scenarios would have significant and negative consequences for British business and the public finances. If the Government believes there is any real prospect of either happening then we will need a plan to deal with them.
“If we were to end up with a ‘no deal’ Brexit this would require a completely new Budget announcement and economic forecast from the Government. Today’s £500m no deal funding, £2.2billion Brexit funding or £15 billion Brexit contingency would not touch the sides of the problem.
"As well as emergency funding for HMRC’s customs capacity we would need to provide support for the implications for business which might face shutdowns (at least temporarily) of huge production lines and laying off staff from the likes of Nissan, Honda, Toyota and Jaguar Land Rover – just some of the multinational corporations with large parts of their manufacturing in the UK – as well as significant extra costs of doing their day-to-day business.
“Of course, the obvious reason the Chancellor hasn’t revealed the true cost of a ‘no deal’ Brexit to the UK is that letting the EU know this truth wouldn’t help our negotiating position at this crucial stage. Regardless of the type of deal negotiated, we need to be prepared for all Brexit eventualities. In practical terms, this means training more customs officers and building up HMRC’s IT capacity and physical infrastructure at the UK’s borders. So, whilst the final Brexit outcome is unclear, we are yet to see a tangible commitment to urgent investment in these areas. We can only hope the Government ends up getting a deal which makes such preparations unnecessary.”
On the confirmation that fuel duty will be frozen for the ninth year in a row, Howard Cox, founder of the FairFuelUK Campaign, said: “Sadly and true to form, despite the continuing and welcome hold in fuel duty, this Government still does not get it, when it comes to our motoring nation. No necessary cut in duty to stimulate the economy, utter silence on those greedy unchecked oil companies continuing to fleece hard pressed motorists at will, and no incentives to move to practical low emissions solutions to improve our air quality. And if Brexit collapses is there the spectre of crippling tax hikes at the pumps to come. A hollow Budget, from and out of touch Chancellor who’s clueless to what to do with UK roads, public transport and our freedom of mobility.”
“We are not here to declare war on the Treasury, but to many of us it feels like the Treasury, along with the Department for Environment, are waging war on drivers, bikers and anyone who uses a van or lorry. The easiest of targets to fill the coffers at the Treasury.”
Posted on: October 30th 2018