Britain’s haulage leaders today welcomed a boost to HGV drivers in Budget, amid new funding for lorry park and suspension of road user levy.
Rishi Sunak announced that the HGV Levy, which had been frozen from August 1, 2022 to July 31, 2022 was now being extended for a further year up to 2023.
The Chancellor also announced funding to improve UK’s notoriously poor lorry park facilities. He also stated that he would be freezing Vehicle Excise Duty for HGVs.
Industry leaders praised the “welcome steps for the hard-pressed haulage sector battling driver shortages, a range of cost issues in the supply chains, and a range other problems.”
The Treasury said in a document that the freezing of VED will cost the Exchequer about £5million a year, while the continued suspension of the road user levy will cost £140million in the 2021/22 tax year and then £75million in the 2022/23 year.
Although details on the new lorry parks have not been released, Whitehall sources claimed last month that plans were being considered to attract more people to the industry.
Ministers are looking to improve working conditions for HGV drivers, who often sleep in motorway lay-bys without hot food, toilets, or showers.
The Continent has historically offered better facilities for lorry drivers, with a UK shortfall of 3,700 spaces for lorries reported in 2018 by the Department of Transport – many drivers were forced into staying overnight in industrial estates.
In September 2020, there will be a long line of lorries waiting on the M20 motorway to Eurotunnel in Folkestone (Kent)
A fortnight ago, thousands of shipping containers were seen at the Port of Felixstowe, Suffolk.
Rod McKenzie, managing Director of the Road Haulage Association said that: “The RHA welcomes both the suspension for another year of the HGV road use levy and the freezing VED for HGVs.
These are welcome steps for a hard working haulage industry that has been struggling to overcome driver shortages as well as other cost issues in its supply chain.
He also welcomed Mr Sunak’s announcement that the planned fuel duty rise will be cancelled, but said Britain was still paying Europe’s highest level of fuel duty rate.
Mr McKenzie said: ‘Rishi Sunak freezes fuel duty for the 12th year in a row. Every pence per litre increase adds £411 per annum to the operating cost of a typical 44 tonne articulated truck doing 75,000 miles per annum. At 8.3 mpg that’s a big saving. But we’re still paying the highest level of fuel duty rate in Europe.’
The Chancellor’s move to keep the duty frozen at 57.95p a litre for petrol and diesel, as it has been for the last 11 years, comes as prices continue to hit record highs.
Yesterday, petrol hit a new record high of 143.48p per litre, with diesel at 146.89p – far above pre-Covid levels of 122p for petrol and 125p for diesel, which were falling.
21p petrol price difference includes 3.5p VAT extra, which is more that the 2.84p scheduled increase fuel duty. So Mr Sunak continues to collect more tax from drivers.
After intense lobbying from Conservative MPs, he put the levy in the Budget on hold for the 12th time. Boris Johnson is still trying to get world leaders committed to climate change targets at Cop26 in Glasgow next week.
Sunak stated today to the Commons that he had already suspended the HGV levie until August. But, he said that he could do more today by extending it for another one year until 2023 and freezing the Vehicle Excise Duty for heavy-goods vehicles.
He said, “With fuel prices at their highest level in eighteen years, I’m not willing to add to the pressure on families and small business.”
“So I can assure you that today’s planned increase in fuel duty will be cancelled. That’s a saving over the next five years of nearly £8billion.’
On Monday, UK haulage industry bosses told the Prime Minister to ‘act now to prevent a Christmas crisis’ as a result of continuing lorry driver shortages.
Boris Johnson was sent a letter by over 1,600 haulage sector bosses led by the RHA. They warn that without taking decisive action, there is a risk of further damage not only to our businesses and livelihoods but also to the UK’s integrated, finely balanced supply chain’.
The letter called for HGV driver to be added on the shortage occupation list for at most 12 months. It also called for reform to driver certification in order to support the return of former drivers.
The HGV sector has warned of a shortage in drivers around 100,000, which has caused disruption in supply across many sectors.
The Government has launched several initiatives such as a temporary visa for three-months with approximately 5,000 visas for non UK drivers.
The RHA however described the proposal as “lacklustre” and “ill-conceived”, calling for a longer-term plan to be implemented.
Today, Rishi Sunak is the Chancellor of India and holds the Budget Box as Rishi leaves 11 Downing Street in London.
In an effort help Christmas preparations, the Government has also amended cabotage rules so foreign drivers can make unlimited pick-ups/drop-offs in a given time period.
Industry groups claimed earlier this month that rising shop prices are being fueled by ‘cartel-like behaviour’ in the shipping sector.
Make UK, which represents Britain’s manufacturing industry, and the British Chambers of Commerce called on the competition watchdog, to investigate whether the skyrocketing cost of international transport is justified.
Companies have reported paying ten times as much to ship containers from countries such as China and Bangladesh, pushing the price of a ton of freight to around £14,000.
As companies threaten to increase the prices of items such as toys and clothing, rising costs have led many to warn about Christmas’s future.