Thursday, November 1, 2018

More Reaction from Freight and Logistics Groups to the Autumn Budget Statement

Road Repairs, the Apprenticeship Levy, Fuel Duty and 'Tech Taxes' Discussed
Shipping News Feature
UK – This week we heard from the bosses of two of the country's leading logistics lobby groups, the United Kingdom Warehousing Association (UKWA) and the British International Freight Association (BIFA) on the subject of the Autumn Budget, and both sound a note of caution with regard to some of the measures being taken.

BIFA asserts the point made earlier in the week by both the Road Haulage (RHA) and the Freight Transport Associations (FTA) that the issues covered by the Chancellor are all overshadowed by the ongoing uncertainty over the shape that the UK’s exit from the EU is going to take. Following Phillip Hammond’s assertion that the spending commitments outlined in the budget statement would not be affected in the event of a no-deal, hard Brexit, Robert Keen, BIFA Director General, said:

“If that is the case, why would Mr Hammond feel the need to also state that his Spring statement might need to be upgraded to a new hard-Brexit budget? Speaking on behalf of BIFA’s members, which facilitate much of the movement of the UK’s visible exports and imports, we believe that any new tariffs and delays that could result from a no-deal Brexit would make today’s announcements unsustainable. Our business sector is an accurate barometer of the nation’s trading performance, and wants to see a Brexit deal as closely aligned with the EU Customs Union as possible.

“Our members remain concerned about the potential impact on infrastructure plans, labour shortages and border delays of a no-deal Brexit, and want to see much more progress with the agreement on several key processes if a frictionless border is to be achieved. Our members want to see the government achieve an agreement on trade and customs as an urgent priority. That will be of much greater importance to the work of our members than anything announced in [the] budget.”

Many of the comments made by industry stakeholders have centred on road infrastructure and fuel duty, the former which engendered more government investment, the latter which maintained the status quo and Keen also touched on these issues saying:

“Whilst the investment in road transport infrastructure might make a difference to our members, we should not forget that back in November 2015, the Government announced that funding would be provided for the largest road investment programme since the 1970s. I am not sure that the country’s network of A roads and motorways has become any less congested since that announcement.

“BIFA has said repeatedly that it is imperative that new road building and road reconstruction projects are not only implemented, but developed in such a way as to maximise their functionality to the BIFA members, which as freight forwarders, use them to move Britain’s visible domestic and international trade.

“Hopefully this talk of infrastructure investment will cease to be just talk and we will see some spades in the ground. Our members will also welcome the news that the freeze in fuel duty would remain, but would have preferred to see an outright cut, the introduction of an essential user rebate and some form of fuel duty stabilisation mechanism."

In his comments on the treasury statement Peter Ward, the UKWA’s chief executive officer, came first to a factor which is intended to help rectify the staffing situation in the logistics industry, something he said the government appeared ‘oblivious to’ earlier this month, that of the Apprenticeship Levy, a scheme we have recently seen much maligned by a variety of commentators along the supply chain. Ward commented:

“Too many employers in our sector see the Apprenticeship Levy as a cost that they do not realise any benefit from, so the declaration that some SME employers will pay half of what they have been contributing towards the Levy will be welcome news to many companies operating in the logistics industry.

To maximise the value that they gain from their contributions, I would urge every company paying into the Apprenticeship Levy to engage in a training programme that up-skills their managers, warehouse operatives, supply chain professionals and customer service teams without delay. The Government will pay 95% of the cost, so it’s an attractive proposition.”

One issue hardly touched on by our bevy of industry analysts was also picked up by the UKWA boss, that of the ‘tech tax’, the measure the government proposes to introduce to ensure technology giants will be forced to pay tax on the sales they generate in the UK from April 2020. Ward was keen to highlight his concerns on this saying:

”Companies such as Amazon have been widely criticised for the small amount of tax they pay in the UK and, at this stage, the Chancellor is only targeting ‘established tech giants’ rather than start-ups with his new ‘tech tax’. But UKWA has been aware of rumblings from Westminster for some time that the changing face of retailing and, in particular, the ongoing decline of the high street, is likely to prompt the Government to introduce new taxes on internet sales.

“UKWA accepts that there is clearly a need for some legacy tax regimes to be re-aligned to societal changes in the digital age, however, as the lines between retail, online fulfilment and logistics become increasingly blurred, we must ensure that the logistics industry, where many companies already operate on extremely thin margins, is not hit with a tax it cannot afford in the future. The Association is monitoring the situation closely and will, of course, argue robustly against the imposition of any new taxes that adversely impact on the companies that operate within the logistics services sector.”

The Chancellor has estimated that the new tax will reap rewards amounting to some £400 million annually, no small change, but according to Private Eye and other observers, the tax savings to Google, Facebook and Apple alone amount to £900 million because of their offshore accountancy status. The government’s Fulfilment House Due Diligence Scheme, which is currently being rolled out, is also due to bring in as much as £1.5 billion in what is currently uncollected revenue. How much these two schemes actually return in the long run will make extremely interesting reading.