The Spring Budget’s impact on the transport sector

Unveiled to Parliament on March 15th, the budget outlined the Government’s plan for tax and spending proposals for the coming years. This included everything from assistance with energy bills, childcare and fuel costs to decisions on corporate tax and pensions.

The Chancellor’s announcement featured some good news for motorists and the transport sector – despite this, many remain sceptical about the financial plan. In this week’s blog, we’re exploring the various policy changes introduced in the Spring Budget, and how they will impact those involved in logistics.

Fuel duty

A particular highlight of the Spring Budget was the Chancellor’s announcement that fuel duty will not increase this month as planned. The Government’s 5p per litre reduction in fuel duty will remain in place for the next year, putting around £100 back into the pockets of drivers. Considering that most goods and services are transported by road, the postponement of the fuel duty increase will be a relief to logistics firms and the economy as a whole.

Although this eases the burden on drivers to a degree, individuals are still enduring the cost-of-living storm. With the prospect of rising energy prices, nearly a quarter of in-market buyers have been deterred from purchasing a new electric vehicle. This, paired with the semi-conductor shortage, means automotive suppliers will need a solid digital infrastructure to keep businesses costs low and shield customers from heightened prices.

Vehicle Excise Duty for HGVs

Vehicle Excise Duty (VED) rates for cars, vans and motorcycles will increase as of 01 April 2023 – however, rates for heavy goods vehicles will remain frozen throughout the 2023-24 financial year. This is designed specifically to support the haulage sector.

With another year to prepare, logistics firms can streamline planning and reconfigure their operation to reduce costs. Considering more fuel-efficient HGVs or exploring opportunities for EVs within your fleet would also be an excellent starting point.

Corporation tax and the HGV levy

A less popular development in the view of businesses was the increase in corporation tax. This means that from April 2023 onwards, the main rate will rise from 19% to 25%. The additional announcement to introduce full capital expensing for the next 3 years on main pool equipment will be a valuable planning tool to help reduce the exposure to the 25% corporation tax rate. This move will motivate transport and logistics enterprises to invest in modern transportation technology and cleaner vehicles.

This August will also see the return of the HGV levy, although its focus will shift towards reflecting the environmental performance of the vehicle and away from its original purpose to ensure overseas operators contributed to the upkeep of the UK road infrastructure. The reintroduction of this levy will add further costs to businesses, therefore policymakers need to ensure that it is implemented fairly.

Fixing potholes

Transport managers and drivers alike were initially pleased to hear that an extra £200m will be allocated toward highway maintenance. After a harsh winter, the UK’s roads are ridden with potholes – many of which are so large, they often cause damage to wheels and tyres.

The £200m is an additional bonus to the £500m that was committed in the 2021 Spending Review. According to the Chancellor, the funds will be used to repair road surfaces within many local communities – potentially reducing the time spent on vehicle repairs, enhancing safety and improving the country’s road infrastructure.

On paper may sound promising, but many industry representatives do question the effectivity of this announcement and consider the sum of money too small to make a real difference. Considering that £7bn from car tax was spent on major roads in 2022 – and these cover far less miles than local roads – the pledged £700m will likely be a drop in the ocean.

TrackTrans

Other shortcomings of the 2023 Spring Budget include a lack of support for electric vehicles and limited efforts to help encourage new HGV drivers into the industry. Of course, no economic plan will be perfect, especially in such a fragile economic climate – hence why it’s important to use a high-quality transport management system (TMS) that can help steer your business in the right direction.

Proven, modern and flexible; TrackTrans has become the solution of choice for many of the best-known transport operations.

Test drive TrackTrans and try our free demo today!