After the U.K.’s Chancellor of the Exchequer announced a new budget that presents at best a mixed bag for the nation’s logistics industry, the chief of the U.K. Warehousing Association (UKWA), called for the creation of a Logistics Minister in the government.
The transportation sector stood to gain from an extension on the freeze on fuel tax, keeping a 5 pence (6.5 cents) per liter reduction for an additional year. But Chancellor Rachel Reeves’s decision to increase the minimum wage and the contributions employers will need to make to the country’s National Insurance program — the equivalent of Social Security — will have a significant impact on businesses across the board, including logistics companies.
“Businesses are facing a ‘double whammy’ when it comes to their labor costs —
the rise in minimum wage, plus a hike in their NI contribution means they need to be savvy in extracting business value from the impact of rising workforce costs,” said David Wells, chief executive of trade association Logistics UK, formerly the Freight Transport Association, of the October 30 budget announcement. “Companies have decisions to make: they could absorb the added costs, which would knock profit margins; push for price negotiations with suppliers who are also feeling the squeeze; pass the costs on to consumers; or zero in on efficiencies and value levers to reduce the impact.”
The UKWA chief, Clare Bottle in a statement October 30 expressed grave concern that the government’s commitment to major infrastructure improvements, also included in the budget, has not taken heed of the increased pressure on supply chains.
“We support the capital investment plans outlined today by the Chancellor but believe that without investment in the supporting supply chains, successful delivery of such huge infrastructure projects is compromised. This budget simply goes to prove we need a Logistics Minister!” she said.
Describing the fuel tax freeze as “the right choice for working people,” Reeves emphasized that rising fuel costs could have “placed additional pressure on commuters and logistics companies still navigating post-pandemic recovery.”
Regarding the minimum wage, Reeves confirmed that the “national living wage,” the legal minimum for over-21s, will increase by 6.7% to £12.21, equivalent to £1,400 a year for an eligible full-time worker. There will be a single-adult rate phased in over time to eventually equalize pay for under-21s.
In a letter to the Chancellor ahead of the budget, the UKWA had emphasized the need for changes in three key areas related to warehousing and logistics.
First, the organization called for a revision of the “unfair and punitive” basis for assessing business rates (property taxes), which UKWA says has put warehousing at a significant disadvantage. It also called for incentives and tax relief on investment in solar panels on warehouse infrastructure, while reforming regulation, energy distribution and local planning, to capitalize on the potential for the sector to double the U.K.’s current solar power capacity.
Thirdly, the UKWA urged the government to modernize industry apprenticeships by adding the new UKWA Warehouse Manager CPC to the existing L3 standard, and ensuring levy funding can be used across all relevant training.
“While we welcome the Government’s commitment to major growth-related projects… it is frustrating in the extreme that the role of supply chains — particularly warehouses — have neither been understood nor acknowledged, let alone helped with funding,” she said in her statement.
“The Autumn Statement made it clear that the economy is shifting, and businesses have tough decisions ahead,” said Wells. “Modernizing through technology is essential for all businesses looking to operate efficiently and build resilience against factors beyond their control.”
