Commenting on Chancellor Rachel Reeves’ announcement in the Budget of an increase in fuel duty from September 2026, Logistics UK Acting Chief Executive Kevin Green said,
“Instead of nurturing the green shoots of economic recovery, the government risks stamping them out. The increase in fuel duty announced in the Budget will mean hundreds of millions in increased taxes for logistics businesses, much of which will be passed onto households and businesses, as well as hitting motorists directly – fuelling inflation across the economy. It is a short-sighted decision that fails to appreciate logistics’ role in the economy – logistics costs are embedded in all products from food and medicines to construction materials and consumer goods: increasing logistics taxes mean increased costs for everyone.
“Logistics businesses already pay around £5.5 billion a year in fuel duty – increasing the tax burden on our industry shows a disregard for a sector that generates £170 billion for the UK economy, employs over 8% of the nation’s workforce and is key to the government’s growth agenda. We urge the Chancellor to reconsider this decision at the earliest possible opportunity, or risk an inflationary impact right across the economy in the spring.”
Clare Bottle, CEO of the UK Warehousing Association, added:
“Cutting through all of the noise, the bottom line for our members is that costs are still going up. This Budget doesn’t have the bombshell of last year’s national insurance rise, but the warehousing sector is being hit by painful business rates increases, minimum wages are rising, and energy costs are really starting to bite.
“Claiming that the business rates surcharge is justified as a tax on the warehouses of ‘online giants’ was a cheap shot. The rise in e-commerce has been driven by consumer choice, and this tax hike will hit all sectors. The Chancellor must know that warehouses store everything from medicines to food, as well as the goods that are sold in high street shops.
“The Office for Budget Responsibility’s analysis shows that higher employment costs are feeding through to lower margins, lower headcounts or higher prices. Meanwhile, planning reform is not yet having the positive impact business is hoping for, with the OBR warning that amendments to the Planning and Infrastructure Bill risk limiting the amount of land released for development*.
“The fact that minimum wage rises were announced as a prelude to the Budget was a grim irony for the warehousing sector, which employs 650,000 people, and is now hitting its peak season with Black Friday and Christmas fast approaching.
“These companies, who make sure Black Friday deals and the ingredients for a Christmas dinner all get to consumers on time, have already been hit hard by rises in minimum wages and national insurance. It’s an unavoidable fact that the cost of storing and handling goods, including labour, goes into the final price a customer pays.”
“The Treasury is aiming to raise a staggering £270 million extra from distribution warehouses over three years. High street businesses don’t exist in a vacuum, they rely on goods that are stored in the UK’s extensive network of warehouses. The extra bill for the warehousing sector will inevitably flow down the supply chain.”
“Changes to the Apprenticeship system, including the Government fully-funding SME apprenticeships for eligible people under 25, look positive, although much of the detail is still to be announced.
“After similar moves by the US and EU, it was perhaps inevitable that Chancellor would seek to remove the duty exemption for imports of goods worth less than £135. The important thing is that it mustn’t create an additional burden for the logistics industry.”
