Chancellor Rachel Reeves is reportedly considering reversing the 5p-a-litre fuel duty cut introduced by Rishi Sunak in 2022 and possibly aligning fuel duty with inflation as the Government seeks ways to address a multi-billion-pound deficit in public finances.
Logistics UK is urging Reeves to maintain the current fuel duty rate, emphasizing that this stability is crucial for the industry to support economic recovery while continuing efforts to decarbonize.
Kevin Green, Policy Director at Logistics UK, warned that fuel is the largest single cost for logistics businesses, and the current duty rate is essential for the industry to plan for a decarbonized future. He highlighted that with margins as thin as 2.5%, any increase in fuel duty would add significant cost pressure, leaving little room for investment in a net zero transition without passing costs onto consumers—something the industry is reluctant to do.
Green also noted that rising wage costs and the expense of new vehicles are already straining the logistics sector at a time when it is critical to economic recovery and growth. He urged Reeves to explore alternative ways to address the fiscal shortfall rather than jeopardizing the increased economic activity that logistics can drive.
Additionally, Logistics UK warned that a fuel tax increase would create a “double whammy” for millions of car drivers, who would face higher costs not only for travel but also for everyday goods, as the logistics sector would have little choice but to pass on the increased fuel expenses to consumers.
“Nothing moves without logistics, and our sector is a key driver of growth and productivity,” Green continued. “We have a significant opportunity to help kickstart the economy, but this potential will be stifled if logistics businesses can’t generate the profit needed to invest in the sector’s future.”
