Monday, November 30, 2015

Road Haulage and Freight Associations Disappointed by Autumn Statement

Fuel Costs and Driver Shortage Overlooked by Chancellor
Shipping News Feature
UK – Last week the Chancellor’s Spending Review and Autumn Statement was met with somewhat mixed reactions by some of the country’s road freight interests as George Osborne announced funding for a new lorry park to ease the roads in the event of Operation Stack whilst he completely omitted any mention of a cut in fuel duty let alone a freeze. Additionally, Osborne announced that transport capital spending will increase by 50% to a total of £61 billion, funding the largest road investment programme since the 1970's, but in doing so, will also cut 37% of the Department of Transport’s (DfT) resource budget.

The issues the UKs haulage industry wanted mention of in the Chancellor’s review were fuel duty and the driver shortfall, as it has been for numerous budgets before. A failure to recognise these problems has led to the Freight Transport Association (FTA), the Road Haulage Association (RHA), and the British International Freight Association (BIFA), issuing warnings of an unstable future in the sector. RHA chief executive Richard Burnett said:

“Our industry is suffering a chronic shortage of 45,000-50,000 drivers. This is jeopardising supply chains and threatens to put the brakes on the economic recovery. This crisis will only get worse as 1 in 5 of the current HGV workforce will reach retirement age in the next 10 years. We are doubly disappointed as we have figures that clearly show the £150 million would be more than recouped through taxes paid by the new drivers. The new driving jobs created by this funding would generate additional income tax, National Insurance, and up to an extra £275 million in fuel duty revenue due to the extra truck miles driven.

”In addition, the extra investment in UK skills would reduce the industry’s reliance on drivers from abroad, which the RHA estimates leads to approximately £180 million per annum being sent back to drivers’ home countries. This is money that would otherwise be spent in the UK, supporting employment, generating VAT and boosting UK growth.

“The Chancellor holds the future of the industry in his hands. By supplying £150 million of funding for driver training he can kick-start a swift and effective reversal in the rapid decline of this essential service industry’s vital skills base. Despite the news that no funding is to be made available today, we shall continue to press our case until a satisfactory outcome is reached. We will continue to step up our lobbying in the weeks ahead. For UK hauliers and for the entire UK economy, time is running out.”

In its submission ahead of the 2015 Statement, the FTA had called on Mr Osborne for a 3p per litre reduction in fuel duty to ease cost pressures on domestic road freight, stimulate growth and create jobs. A study part-funded by FTA and published by the Centre for Economic and Business Research (CEBR) confirmed that low forecourt prices raised UK GDP by 0.6%, stimulated an extra £11.6 billion of economic activity, created 121,000 jobs and boosted government tax revenues in 2015. In response to George Osborne’s announcement, Karen Dee, the FTA’s Director of Policy, commented:

“The lack of recognition of the importance of reducing fuel duty is a missed opportunity by the Government in the Autumn Statement today. The 3p per litre reduction would have provided much needed economic relief, not only to the logistics sector, which faces continuing difficult trading conditions, but also to the wider motoring public who rely on their cars to get to and from work.”

On a happier note, the FTA welcomed the news of the Operation Stack funding, which includes up to £250 million for a major new permanent lorry park to take the pressure off Kent’s roads, and the other infrastructure investments Osborne announced. Currently thousands of trucks are parked on stretches of the M20 during disruptions to Channel crossings. The Government will consult on a preferred site at Stanford and other alternatives in the near future.

Other infrastructure projects Osborne announced include a ‘pothole fund’ of £250 million over the next five years to tackle the holes that blight local roads, on top of nearly £5 billion of funding for roads maintenance, a £300 million increase compared to the previous Parliament. BIFA Director General, Robert Keen, said:

“There has been a distinct lack of investment in the UK road infrastructure network over the past few years. This lack of spending has caused the country’s network of A roads and motorways to become congested, undermining the UK’s competitiveness in comparison to its international peers.

“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. So, today’s news will be warmly welcomed by BIFA members, which as freight forwarders, use these roads to move Britain’s visible domestic and international trade. We are now hopeful that talk of infrastructure investment will cease to be just talk and we will see some spades in the ground.

“BIFA Members that use the Cross Channel services will also be pleased at the news that £250 million will be spent on facilities in Kent to relieve the pressure on roads in Kent created when Operation Stack is in place.

“However, those members will be disappointed that Mr Osborne did not cut fuel duty. Whilst, the fact that he did not even mention fuel duty effectively means that the fuel duty freeze of the last five years continues, you could be forgiven for thinking that this is probably now a fiscal platform for him to increase duty in next April’s Budget.”

Photo: Operations Stack needs the extra truck parking!