On 22nd November 2023, the UK Chancellor Jeremy Hunt unveiled his Autumn Statement. Its contents was precisely 110 measures spread across 120 pages, all aimed at supporting individuals and businesses to 'help grow the economy'.
Headline figures include the cutting of Class 1 National Insurance contributions from 12% to 10% on earnings between £12,571 and £50,271. Also an 8.5% raise in the state pension, honouring the tripe lock. But there were plenty of other policy announcements and amendments which have not received the headlines.
"Our plan for the British economy is working, but the work is not done... we back British business with 110 growth measures."
Jeremy Hunt, Chancellor of the Exchequer
So, what are implications of the statement for the logistics and supply chain industry? Furthermore, what sector-specific policy has been announced to benefit firms in their growth strategy? Here we will explore the logistical and wider business implications of the 2023 UK Autumn Statement.
Supply chain impacts of the 2023 UK Autumn Statement
HGV Levy & road tax for HGVs frozen for 2024/25
Hidden within the Autumn Statement was a freezing of the HGV levy and road tax for HGVs. Meaning that while cars, vans and motorcycles will have their Vehicle Excise Duty (VED) increased in line with RPI in April 2024, for HGVs it will remain at 2022/23 levels.
RPI is one of the two inflationary measures in the UK and was at 6.1% in October 2023. It typically sits higher than CPI, which was 4.6%.
“From medical supplies delivered to hospitals to food delivered to stores, HGVs matter to our economy. That’s why we’re freezing the HGV levy and road tax for this type of vehicle – protecting vital journeys.”
The Treasury on X, formerly Twitter.
It's a policy which the Treasury is expecting to provide a £105 million boost to the road freight sector over 5 years. An industry which supports almost every other goods based market.
Lorries weighing at least 12,000kg are liable for the HGV levy, including those entering the UK from abroad. Meanwhile VED, often referred to as road tax, is paid by vehicle owners annually.
Fuel duty plans remain unchanged
The Chancellor announced in March that the 5p fuel duty cut would remain in place for 12 months, and that the level would not rise with inflation. There were no announcements on fuel duty in the Autumn statement, which would suggest duty is set to rise in April 2024, when the cut expires.
That is despite fuel remaining a pinch point for supply chain managers in every sector, driving up freight costs. The average price of diesel has risen from 146p a litre at the end of July, to 157.5p on 22nd November according to the RAC. That's a near 8% increase.
Full expensing on certain machinery is made permanent
Full expensing on qualifying plant and machinery purchases will continue after 1st April 2026, effectively reducing the in-year cost of new equipment by 25%. Initially announced in March 2021, the policy means business investment in certain assets can be 100% deducted from company profits in the year that it's bought, rather than being spread across multiple tax years. Consequently, corporation tax obligations are reduced in the first year.
This is particularly pertinent to supply chains, when you explore the list of qualifying purchases, which includes, but is not limited to:
- Warehousing equipment such as forklift trucks
- Lorries and vans
- Other vehicles, including tractors
- Ladders, drills and other tools
- Construction equipment such as bulldozers and excavators
- Computers and printers
There are a wide range of business investments covered by the scheme, which can benefits firms in a whole host of industries. However, note that finished cars and assets for leasing are excluded from this policy.
Freeport tax relief extended from 5 to 10 years
The window for claiming tax relief at Freeport sites is being extended from 5 to 10 years, until 2031 in England. Meanwhile, the Government is working with the devolved administrations to agree how the extension can be brought to Scotland and Wales.
Freeports are specific regions, typically surrounding a key logistical hubs, that can offer unique incentives to encourage businesses to invest there. These incentives include customs simplifications and tax breaks.
England's freeport regions are as follows:
- East Midlands Freeport (East Midlands Airport)
- Freeport East (Felixstowe Port)
- Humber Freeport (Humber Port)
- Liverpool City Region Freeport (Port of Liverpool)
- Plymouth and South Devon Freeport (Port of Plymouth)
- Solent Freeport (Southampton Port)
- Teesside Freeport (Teesside International Airport, the Port of Middlesbrough and the Port of Hartlepool)
- Thames Freeport (London Gateway)
() denotes significant trading infrastructure in the region
For more information on how you can benefit from investing in a freeport region, see the Government website here.
Key sector-specific policy for businesses in the 2023 Autumn Statement
Beyond the announcements relevant to the logistics and wider supply chain industry, there were plenty of sector-specific business policies rolled out. Some of which promising huge incentives and support for firms. We've highlighted the most significant here.
Automotive, Aerospace & Manufacturing
£4.5bn in funding is being made available, starting in 2025/26, to eight manufacturing subsectors: including automotive (particularly for zero-emission vehicles and supply chains), aerospace, life sciences, and clean energy. It's hoped the money will drive innovation and productivity across the eight sectors, boosting international competitiveness.
Alongside that, the Investment Zone programme will be extended from 5 to 10 years. The programme involves a small number of dedicated geographic areas of England which are being granted tax and regulatory rules intended to drive economic growth. The UK Government claim they will work with the Governments of Wales, Scotland and Northern Ireland to deliver Investment Zones to those regions too.
Greater Manchester and the West Midlands' Investment Zones will focus on advanced manufacturing. Whilst the East Midlands Investment Zone will focus on advanced manufacturing and green industries. These zones are predicted to generate £3.4bn of private investment. They join Sheffield, Rotherham, Doncaster and Barnsley as areas targeted for economic growth.
“These targeted investments will ensure the UK remains competitive in sectors where we are already leaders and innovative in areas where we are not... Taken together across our fastest-growing innovation sectors, this support alone will attract an estimated £2bn of additional investment every year over the next decade.”
Jeremy Hunt, Chancellor of the Exchequer.
Businesses in the automotive, aerospace and other manufacturing sectors are also set to benefit from the full expensing scheme, which has been made permanent, as discussed earlier in the article.
Food and drink
Certain food and drink firms are also eligible for a portion of the announced £4.5bn in funding for the advanced manufacturing sector, and the separate full expensing scheme for qualifying new assets.
"We look forward to working with the government on how we best use the £4.5bn announced to unlock innovative investments in food and drink manufacturing that support the UK’s transition to net zero and strengthen our food security."
UK Alcohol Duty has been frozen until at least August 2024, and the Government will not give a decision on a further uprating until the Spring Budget in March. This comes off the back of a huge fuel duty restructuring which came in the Spring Budget of this year, which saw duty rates rise dramatically across almost all beverage types.
Meanwhile, the Government is maintaining tariff-free imports on over 2000 different goods to avoid additional costs and provide continuity for UK businesses. The goods included in this suspension include certain ingredients used by food manufacturers and vaccine components.
Retail
Business rates relief for retail, hospitality and leisure facilities is being extended for 2024/25. That means eligible firms are able to receive up to 75% off their rates bills for the upcoming financial year. The Autumn Statement declares this a tax cut worth £2.4bn.
Jeremy Hunt also promised to fully compensate English Local Authorities lost income as a result of these measures. More information on the business rates relief can be found here.
Finally, the women's sanitary product VAT zero rate relief will be extended to reusable period underwear from 1st January.
So it was a business-focused Autumn Statement from Chancellor Jeremy Hunt, unveiling a raft of measures aimed at getting the economy growing by encouraging investment and simplifying business process. However, growth predictions are still very modest for the coming year.
Just 0.7% GDP growth expected in 2024, that comes after 0.6% growth in 2023. Although most analysts expected a recession at the beginning of the year, so the figures for 2023 are better than predicted.
In terms of logistics and infrastructure, there was not a huge amount of new policy. In fact, the omission of any news on fuel duty is arguably the biggest piece news for the logistics sector, with the 5p cut set to expire in April next year.
Time will tell if the measures announced this month drive the growth the UK Government are hoping for.
You can view Chancellor Jeremy Hunt's 2023 Autumn Statement in full here.
