Business group Logistics UK is calling on government to freeze fuel duty forever to help the sector make the shift to alternatively fuelled vehicles on the road to Net Zero. As David Wells, Chief Executive of Logistics UK explains, the sector needs time to prepare for alternative fuels:

“As the logistics industry recovers from the impact of the pandemic on the economy, and with the threat of price inflation on the horizon, every penny counts for our sector, which traditionally runs on extremely narrow margins,” he says. “While our members are committed to switching to cleaner alternative fuels from diesel, the cost of a new alternatively fuelled HGV makes them challenging for many businesses – despite government grants of up to £25,000 – when, at present, businesses must allow for higher operating costs, leaving less spare cash for investment.

“Our industry is fully behind the switch to alternative fuels but, in order to do so, needs a confirmation from government that fuel duty will not be used as a tool to close budgetary gaps in the economy. This will help our member businesses to allocate more funds to the vehicle replacement cycle, secure in the knowledge that they will not be surprised by unexpected duty hikes in the coming months or years.”

Diesel is one of the single biggest running costs in operating a large fleet of HGVs: Logistics UK’s own research indicates that fuel accounts for more than 30% of HGV’s operating costs. And with many logistics businesses facing increased costs due to spiralling drivers’ wages, caused by the current skills shortage, finances for businesses recovering from the impact of COVID-19 are very fragile.

“With margins pared down to a minimum, and inflationary pressure set to bite over the autumn, a guaranteed, permanent freeze on fuel duty would allow our members to recover from the impact of the pandemic and start to focus on how best to make the switch to alternative fuels on the road to Net Zero,” adds David Wells.

The call comes as Logistics UK continues its regular dialogue with the taxation team at the Treasury, to ensure that the financial interests of its members are protected.

Many of Logistics UK’s members are signing up to the organisation’s decarbonisation campaign, Route to Net Zero, which aims to help business make the necessary changes on the road to decarbonisation.