Logistics UK has urged the Chancellor not to impose any further tax increases on the logistics industry, warning that doing so would fuel inflation, undermine business competitiveness, and add costs across the entire economy.
In its formal submission to the Treasury ahead of the Autumn Budget, the business group — which represents all parts of the logistics sector — said the industry “cannot shoulder the burden of any more tax increases without fuelling inflation and stifling growth.”
The organisation’s analysis highlights how logistics costs are built into almost every product and service — from food and medicines to construction materials and consumer goods. Any rise in fuel duty, employer National Insurance Contributions (NICs) or business rates, it said, would ultimately feed through to higher prices for households and businesses.
Employing 2.7 million people, around 8% of the UK workforce, the logistics sector is already facing significant cost pressures. Logistics UK estimates that recent increases in employer NICs will cost the industry £1.7 billion this year alone. Fuel duty remains another major concern, with logistics firms accounting for around 20% of all fuel duty paid to HMRC.
Acting Chief Executive Kevin Green said it was crucial the Chancellor understood the impact of further taxation. “The Chancellor has said she is planning ‘targeted action’ to bring down inflation and it is vital she understands that increasing fuel duty would run the risk of doing the exact opposite,” he warned.
He explained that fuel represents about a third of the cost of operating a 44-tonne HGV and that any duty rise would not only “drive up inflation” but also harm smaller businesses that lack the flexibility to absorb higher costs. “The tax also hits smaller operators the hardest as they are often unable to negotiate contracts that enable them to pass on the increased cost of fuel to their customers,” he added.
Logistics UK is also calling for reform of the business rates system to ensure it supports rather than penalises investment in logistics infrastructure. Green said that warehouses, distribution centres and logistics hubs across the country already face steep bills and that current reform proposals risk adding to inflationary pressures.
“Plans for a higher multiplier on properties with a rateable value above £500,000 will disproportionately affect our sector,” he said. “The business rates reforms, as they are currently proposed, will add millions to operators’ costs, which will ultimately be passed on through supply chains to retailers and consumers.”
Green said the Autumn Budget must recognise logistics as a fundamental enabler of the UK economy, quoting the government’s own Modern Industrial Strategy, which describes logistics as making “a vital contribution to the UK economy and the competitiveness of the Industrial Strategy growth-driving sectors.”
He added: “It supplies our hospitals, schools, factories, construction sites, shops and homes with everything they need, everywhere, every day – nothing moves without logistics.”