Rachel has written to the Chancellor, Rachel Reeves, calling for action to protect drivers and hauliers from the rising cost of fuel that is occurring as a result of Donald Trump’s disastrous war in Iran.
In her letter she said:
Dear Chancellor,
I am writing to you as 20% of my constituents in North Warwickshire and Bedworth work in the freight and logistics sector. My constituents rely on the job market in this sector succeeding. A continuation of the fuel duty freeze will go a long way to ensuring the sector is protected under difficult global circumstances.
The UK logistics sector generates £170 billion for the UK economy and employs over 8% of the nation’s workforce, while underpinning almost every area of our national economy. Making the sector essential for local growth, jobs, and the economy. The freight and logistics industry operates on low profit margins, with a pre-tax profit margin of 1.58%. Fuel costs represent between a fifth and a quarter of road haulage operating costs, meaning the current rising costs of fuel due to international pressures represent a considerable challenge to the sector.
When I speak to hauliers, they are incredibly proud to belong to an industry where the overwhelming majority (99.7%) are small to medium enterprises (SMEs), but this also makes increases in fuel costs a difficult burden to shoulder for small businesses. A 5p rise in fuel duty would be an additional £2,325 per year for the operating costs for each HGV a business owns. This will also have a significant impact on larger businesses too. For example, for a 50-vehicle fleet, a 5p duty hike could add £125,000 – £150,000 a year in additional costs. An increase in fuel duty along with the rising cost of fuel from the middle east, will present businesses with a need to cut costs or close their doors.
Adding additional costs to the freight and logistics sector could also produce a worrying multiplier effect, as this sector underpins national supply chains in almost every area of our economy. In particular, the delivery of construction materials and food products are both freight-intensive activities and driving down costs in these sectors is essential for delivering on our ambitious national housebuilding goals and action to tackle the cost-of-living for ordinary families. Extending the freeze to fuel duty, will help to keep costs lower in our supermarkets. It also goes without saying that increasing fuel duty would impact ordinary motorists at the pumps.
We recognise the challenges facing the economy during a difficult period of international affairs. With no date for an end to the blockade of the strait of Hormuz it is vital that we prioritise a fuel duty freeze, to ensure the freight and logistics sector can continue to deliver growth and prosperity in my constituencies and across the country.
Yours sincerely,