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Autumn Statement: Industry reaction

Today's Autumn Statement contained encouraging signs for logistics businesses looking to drive recovery in the economy, but the detail of the Chancellor’s proposals will show whether or not the industry will see real changes as a result.

David Wells OBE, Logistics UK’s Chief Executive, said: “The decision to make the current full expensing allowance for capital permanent is a welcome step that will support logistics businesses with long-term planning and investment. Our members are keen to identify if this change will include the cost of acquiring leased or hired vehicles, as well as those purchased outright. In addition, detail is needed to identify whether the move will cover the cost of installing the infrastructure required to help the industry decarbonise, as our research shows this could amount to an outlay of up to £1 million per site – a prohibitive charge which will hinder the industry’s shift to net zero.”

News that the planning system is to be streamlined has also been welcomed by the business group, which has been pressing for changes to be made to enable logistics businesses to plan more efficiently for some time.

“Since our industry supplies every sector of the economy, it is vital that logistics is included as part of the overall planning process, not as a bolt-on afterthought,” Wells added. “We will continue to press government to keep us at the heart of decision-making when it comes to business investment and development.”

Logistics UK said it continues to seek detail on how plans for Investment Zones and Freeports are to be implemented, as well as on ways the industry can be assisted on the route to decarbonisation.

“The devil of today’s announcement will be in the detail,” continued Wells. “While there are indications that the statement could boost economic activity, our members are concerned about how Freeports and Investment Zones could work for them. In addition, businesses still need clarity on the support government will be providing for the transition to a net-zero economy, and we will be working closely with them in the coming weeks to ensure the best possible outcomes to keep the UK trading, both domestically and internationally.”

The Road Haulage Association said the Autumn Statement was “welcome news for the road transport industry on Vehicle Excise Duty (VED), business investment and planning reforms”.

“We are delighted the Chancellor has listened to RHA’s campaigning efforts on several fronts. Hauliers and coach operators keep goods and people moving – and are vital to our economic vitality.

“We are pleased to see VED for HGVs and the HGV levy frozen for 2024-25. This follows our recent campaigning and will support hauliers who are facing significant cost pressures. The cost of operating an HGV has risen by nearly 10% over the past 12 months in the face of thin average margins of just 2%.

“Our industry is experiencing reduced activity and fewer goods being moved due to cost-of-living challenges. Road freight volumes are down by 10% and we have seen an increase in insolvencies with reduced profitability.

“We welcome the announcement on full expensing to make the change announced in the Spring Budget permanent. Firms will be able to claim back the tax on buying new plant and machinery, including vans, lorries and warehousing equipment.

"We are also pleased that that the Chancellor acknowledged concerns that planning is often a barrier to investment in major infrastructure. The introduction of a premium planning service with guaranteed accelerated decision dates for major applications and new powers to hold councils to account is welcome. A strong network of safe, secure roadside truck parking facilities is a key priority for us.

“The new Investment Zone deals are much needed and we urge that they’re supported with high-quality road infrastructure.

“We also support Government action in creating more certainty for investors in low-carbon infrastructure. This is through extending the critical national priority designation for nationally significant low-carbon energy projects.

“We continue to call on the Government to introduce an emissions-linked rebate to encourage hauliers and coach operators to switch to low-carbon fuels such as HVO.

“Finally, the £2 billion funding being made available to support the manufacturing and development of zero-emission vehicles is welcome, however we need to see more concrete plans on how this funding will be targeted towards commercial vehicles.”

Although the chancellor didn’t directly mention international trade, imports or exports in his speech, Marco Forgione, director general of the Institute of Export & International Trade (IOE&IT), says that there was a surprising amount for the UK trade community in it:

“The announcement of the extension of tax reliefs for freeports [from five to 10 years] is exactly right and provides certainty for the businesses which were considering investing in them.

“Freeports now have the opportunity to take long-term decisions and play a key role in attracting more investment into the UK.

“The new investment zones, all focused around advanced manufacturing, will strengthen the UK’s position as a leading manufacturing nation.”

More broadly, Forgione says that IOE&IT members will be pleased by many of the growth measures announced:

“The announcements on national insurance, business rates and full capital expensing are all very positive and welcomed by our members. However, it is clear from the Office for Budget Responsibility that growth is still constrained.

“Our members, and the wider business community, will be looking for much more in the spring which encourages investment and supports UK businesses, who are the backbone of UK growth.”

One major area of focus for IOE&IT in 2023 has been the launch of the E-Commerce Trade Commission, an initiative to encourage more small and medium-sized enterprises (SMEs) to start exporting using online platforms.

Here, Forgione again says there was some good news, but that more could be done: “There was a lack of direct support to help small businesses trade online, although the government’s commitment to set up a taskforce with industry to explore how best to support SMEs to adopt digital technology will greatly assist their capacity to export.

“The focus on AI to make the UK a ‘powerhouse’ is also vital for supporting businesses to make their trade processes smoother and more competitive in the future.”

On the increased investment for apprenticeships, Forgione said this was “vital”, as this is a necessary part of closing the skills gap.

“We called for the government to look at reforming key aspects of the current apprenticeship model and it’s encouraging to see a commitment in the Autumn Statement that the government will continue to work closely with businesses to improve the apprenticeship system to meet the needs of learners, employers and training providers.”

The IOE&IT had also called for a formal import strategy to support the existing export strategy. While Forgione was pleased that all the recommendations of the Harrington Review into foreign direct investment would be implemented – including his call for a business investment strategy – it was a missed opportunity not to take a similar approach for imports:

“It is disappointing there is still not a plan in motion to create an import strategy, which would be linked to the current export strategy. This would have given domestic and foreign businesses more confidence to make long-term investment decisions in the UK.

“Real growth and economic security can only be achieved through unlocking the potential of international trade in every town, city and region of the UK.”

ParcelHero’s Head of Consumer Research, David Jinks said the Autumn Statement was “a bad news sandwich for Britain’s beleaguered small retailers and manufacturers”.

“The top layer is the fact that the Government has now made permanent a tax break known as "full expensing". This allows businesses to deduct spending on investment from their profits, meaning they pay lower amounts of corporation tax. Companies will get up to 25p off their tax bill for every £1 that they invest, amounting to a tax cut of over £10bn a year, according to the Treasury.

“The bottom layer of good news for logistics and tech companies is the announcement of an additional £4.5bn of support for manufacturing, including £960m for new green industry firms. There’s also £500m promised over the next two years to fund more innovation centres to help make the UK an "AI powerhouse". The role of AI is set to transform Britain’s online retail and tech industries over the coming years.

“However, sandwiched between these two layers is a hefty filling of bad news. Firstly, Hunt’s speech revealed the Office of Budget Responsibility (OBR) has sharply downgraded its forecast for economic growth in 2024 and 2025 from previous predictions. The figure for 2024 has fallen from 1.8% to 0.7%, while 2025 has similarly plummeted from 2.5% to 1.4%. Those are big cuts in expected growth that will impact on businesses of all size over the next couple of years. Inflation and interest rates are also predicted to drop more slowly than expected.

“Also leaving a bitter taste, the Government has again failed to tackle business rate reform, leaving many retailers and businesses in a state of limbo for another year. Yes, the Chancellor announced the reapplication of the sticking plaster that is the small business multiplier for a further year. He has also continued the 75% discount on business rates up to £110,000 for retail, hospitality and leisure businesses for another year.

“Although that should save the average independent shop over £20,000 next year, it still leaves the eventual resumption of these rates hanging like the sword of Damocles over many much-loved local stores. Businesses will find it hard to plan for the future until there is a proper solution to the vexed issue of rates.

“One piece of good news for many people is that National Insurance will be cut by 2%, from 12% to 10%, from 6 January, 2024. That could add up to a £450 annual saving for someone on a salary of £35,000. It may be enough to boost consumer confidence at a vital time for retailers. Spending this month has been down on traditional levels for the beginning of the Christmas sales season.

“Knowing there’s a New Year tax decrease might be the incentive for shoppers to return online and in-store and encourage a burst of early Christmas shopping, perhaps in time for Black Friday this week.”

Simon Hobbs, chief executive of Kinaxia Logistics, said: “Our economy needs a lift in sales, so the increase of 9.8 per cent in the National Living Wage to £11.44 an hour, and the two per cent reduction in national insurance, will hopefully generate more disposable income and aid the retail recovery – which in turn will create more and much-needed volume for our transport and warehousing sector.

“Through government and industry-funded initiatives such as Generation Logistics, we are trying to raise the sector’s profile and attract more entrants to our important industry. The commitment to ‘bust the planning backlog’ and reform the planning system will hopefully speed up necessary improvements in the UK’s transport infrastructure and the building of secure driver roadside facilities.”



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