Budget 2017: Securing economic stability for the UK Road Haulage sector
6 min read
The Road Haulage Association writes in advance of the Budget in which it wants the Chancellor to ensure smooth border and customs checks for hauliers post Brexit, to work with the sector to help reduce the 45,000 driver shortage and to cut fuel duty by 3 pence per litre.
The Road Haulage Association (RHA) is the trade organisation for the commercial hire and reward sector of the road haulage industry and represents 7,000 businesses including owner operators, SME’s and through to and including 90% of the largest 100 companies in the sector. The sector is responsible for moving 90% of the UK economy. If the challenges facing the logistics industry are not immediately confronted the productivity of the sector, and the competitiveness of the UK economy, will be undermined.
The forthcoming Budget Statement presents an opportunity for the Government to support the 5th largest sector in the UK which employs 2.5 million people and contributes £72 billion to the economy.
Members are reporting a stable economy with strong demand. However, they also report that cost pressures are growing fast. Inflation coming from increased fuel costs and a worsening availability of drivers is becoming an immediate concern. Focussing on four of the most prominent issues facing our members up and down the country this submission provides effective solutions and details the potential consequences of failing to act.
Skills Shortage
We estimate that there is a driver shortage of 45,000. With the average age of a HGV driver now 55, and only 2% under 25, many drivers are coming up to retirement while not enough young drivers are coming through to replace them. In addition, the industry is currently reliant on around 60,000 non-UK EU nationals. This must be carefully considered in light of the UK’s decision to exit the European Union. Action is being taken and we welcome the Government's introduction of an industry specific trailblazer apprenticeship scheme and we continue to work intensively to support uptake amongst our members since the schemes introduction in April 2017.
We believe that there are opportunities to improve take-up and training in our sector and we will be discussing these with departments in due course. In order to accelerate closing the skills gap in our industry, we seek support in this Budget statement for our Road to Logistics initiative, a charitable organisation that matches jobseekers with employers and that aims to reduce unemployment and reoffending. It has particular focus on the disabled, young people leaving care, ex-service people and ex-offenders. This works alongside another RHA initiative, ‘She’s RHA’, to help to encourage women into our sector. In order to recruit and train new drivers we are seeking initial funding of £2m, split across those departments standing to realise the greatest benefit including the Ministry of Justice, Home Office, Ministry of Defence, Department for Work and Pensions, Department for Transport and Department for Education. The benefit to Government in Year 1 will be £28m and as the initiative rolls out this benefit will rise in line with growth.
Fuel Duty
The RHA’s position on fuel duty is well-known. We have supported the FairFuelUK campaign alliance for several years and continue to do so. There is inflationary pressure being experienced by our members – not just on fuel costs but also as a result of labour supply issues and worsening levels of congestion on the road network. The UK has a diesel duty rate that results in higher fuel costs than our neighbouring trading partners – this undermines UK competitiveness.
The RHA asks the Exchequer to cut the duty level by 3 pence per litre. Independent research demonstrates that a reduction in duty will lead to more growth and job creation. CEBR estimates that a 3p cut would add another £1bn to UK GDP, at least 8,000 more jobs and will reduce inflationary pressure significantly. Some are calling for increased fuel duty, especially on diesel in an effort to tackle local air quality issues. Whilst the RHA agrees that action is needed to improve air quality we believe fuel duty on diesel is an inappropriate tool to drive change.
The existing changes in lorry vehicle standards are already having a dramatic impact on NOx emissions – we estimate that the switch to Euro VI reduced NOx by a third in Great Britain between 2014 and 2016. Adding to fuel costs by an increase in fuel duty will not reduce emissions, may even slow the take up of cleaner newer vehicles and will add to inflation.
Road Investment
Our members are concerned by the level of congestion being experienced on the road network. It is a fundamental need for the UK economy that goods are able to be moved to meet the needs of people and businesses in an efficient and predictable way. Current levels of congestion result in unpredictable and longer journey times. We recognise that the Government has made commitments in this area in the past. The RHA would encourage the Government to restate and extend its commitment to long-term investment in the road system – both on the strategic road network and other major local roads.
Brexit
Lorries are the lifeblood of our nation. Hauliers carry goods to every corner of the country stocking shops from Dover to Dundee. It is estimated that 10,000 HGV’s pass through the Dover port per day alone and to keep Britain moving after Brexit this and other port traffic elsewhere in the country must keep flowing.
Trucks travelling through Dover and the Channel Tunnel account for 40 per cent of all our trade with the EU and 95 per cent of freight movements imported and exported come and go through sea ports as opposed to airports.
We need to avoid chaos on either side of the English Channel and between Ireland and Great Britain as Ports and officials will become overwhelmed.
The RHA clearly supports an implementation period after March 2019 so that businesses can prepare for new customs and other control arrangements.
It’s already clear that investment is badly needed. We saw miles of traffic queueing back from the Channel Ports in 2016 and a staggering 250,000 people were caught up in the gridlock. In the summer of 2015, queues of 4,600 HGV’s stretched back 30 miles.
In the forthcoming Budget Statement the Government must show its commitment to ensuring that:
- HMRC has adequate resources, including trained personnel and infrastructure where needed, to meet the demand for customs and other controls.
- The Le Touquet Agreement remains in place to maintain the juxtaposed border controls in each country.
- The UK has customs procedures at borders where lorries can enter and exit the UK without delay to allow easy movement of goods.
- Our industry retains the ability to recruit HGV drivers and other workers from abroad based on the needs of the industry. There are 60,000 drivers currently working in the UK who are from other EU member states. While improved efforts to train drivers in the UK will help ease the shortage there will be a continuing need to recruit from outside the UK. With a current driver shortage of 45,000 these workers are critical for the competitiveness of the UK economy and the smooth running of the supply chain.
As the largest trade association in the UK with a focus solely on the UK haulage industry, we stand ready to assist the Government in any way that we can. We have a wealth of knowledge and experience on all of the above issues and can provide you any information and statistics that you may require on all of the above priorities.
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