On 30 October 2024, chancellor Rachel Reeves revealed the Labour government’s highly-anticipated Autumn Budget. This announcement has sparked debate on everything from taxes to wages to housing, but how might the Autumn Budget impact logistics and supply chains in the UK?
Logistics Manager has broken down some of the key takeaways from the Autumn Budget, and heard the reactions of industry leaders to this announcement.
Infrastructure
As outlined in the Autumn Budget, the government will establish the National Infrastructure and Service Transformation Authority (NISTA) in an effort to ‘drive more effective delivery of infrastructure across the country’. It says that ‘NISTA will combine the functions of the National Infrastructure Commission and the Infrastructure and Projects Authority’.
NISTA is due to be operational by spring 2025 and will ‘implement the government’s infrastructure strategy in conjunction with industry and, alongside existing assurance mechanisms, will have an enhanced role in supporting major projects, including validating business cases prior to HMT funding approval’.
In addition to making planning reforms to remove barriers to growth, the government has committed to the development of a ’10-year infrastructure strategy’. This is set to be published ‘alongside Phase 2 of the Spending Review, the forthcoming publication of the Get Britain Working White Paper and the establishment of Skills England to ensure [the UK has] the highly-trained workforce needed to deliver economic growth’.
Additionally, it is set to invest in growth and regeneration projects across the UK, including providing funding for the Investment Zones and Freeports programmes UK-wide. Specifically, it points towards the approval of the East Midlands Investment Zone to support advanced manufacturing and green industries, and the designation of five new customs sites in existing Freeports.
In response to the Autumn Budget, Matt Gregory, managing director for Northern Europe at Körber Supply Chain Software, commented: “The lack of specific measures of support for the logistics sector in today’s Autumn Statement is disappointing, given the crucial role that it plays in supporting the UK economy. This approach could negatively impact innovation at a time when we need it most.
“To meet complex supply chain challenges, more needs to be done to improve resilience and agility. The first step is demonstrating the viability of a career path in logistics. We should be seeking to build the workforce and skills we need as a country to continue to compete on a global scale. The lack of industry collaboration, through targeted education programmes, or specific schemes to enhance our skills in emerging technologies like AI, harms our position as a key global supply chain leader.
“Announcements regarding key infrastructure projects also require significant investment in the supply chain. Technology and data analytics are key to ensuring the real-time coordination of materials, equipment, and personnel across complex networks. Further clarity is needed on how the government intends on building the supply chain processes, technologies and talent needed to deliver these projects within budget and on time.”
Industrial strategy and trade
As per the Autumn Budget, the Industrial Strategy is designed to ‘deliver the certainty and stability businesses need to invest in the UK’s growth-driving sectors’. It notes that the primary objective of the Industrial Strategy is to drive growth, while also looking to ‘shape the type of growth being pursued: to support net zero, regional growth, and secure and resilient growth’.
Earlier this month, the government identified the UK’s eight biggest growth-driving sectors: advanced manufacturing, creative industries, clean energy industries, defence, digital and technologies, financial services, life sciences, and professional and business services. In the Autumn Budget, the government said that it will produce plans for each sector as part of its commitment to help them thrive.
The Budget also confirmed the Industrial Strategy’s commitment to target interventions to drive growth where the UK has, or could develop, a comparative advantage. It ‘prioritises long-term funding for growth-driving sectors ahead of the full modern Industrial Strategy’s publication next year’.
Amongst the funding that will be made available in the pursuit of this goal is the allocation of: £975 million for the aerospace sector over five years to ‘fund vital research and development for the latest aerospace technology’; over £2 billion over five years to ‘support the automotive sector including the zero-emission vehicle manufacturing sector and supply chain, providing the long-term certainty that industry need to invest in advanced, greener technologies; and up to £520m for a new Life Sciences Innovative Manufacturing Fund to ‘drive growth and build resilience for future health emergencies’.
In a statement, the Institute for the Motor Industry (IMI) said that it is “delighted that the chancellor has, today, acknowledged the importance of automotive in the industrial strategy with a £2bn commitment for the sector, supporting the growth of the electric vehicle parc”. The IMI “believes it is critical that a share of this commitment is allocated to training and continuous professional development for those working both inside and outside the factory gates, alongside manufacturing infrastructure”.
The government has also announced that it will publish a Trade Strategy in 2025. This, it has said, will ‘renew the UK’s commitment to free and open trade, support the government’s Industrial Strategy and net zero ambitions, and enhance economic security’.
To support this strategy, the government plans to work with the European Union to ‘identify areas where [the UK] can strengthen cooperation for mutual benefit, including the economy, energy, security and resilience’.
Supply chain resilience
The Autumn Budget confirmed that UK Export Finance (UKEF) will now be able to provide financial support to UK companies supplying critical minerals to UK exporters in high-growth sectors such as EV battery production, clean growth, aerospace and defence. This is aimed at ‘furthering the government’s net zero ambitions and building supply chain resilience’.
Spencer Starkey, executive vice president of EMEA at cybersecurity firm SonicWall, has shared his belief that the Autumn Budget fails to consider the vital role of cybersecurity in ensuring resilience: “Considering the depth and severity of cyber attacks we’ve seen in the last few years, such as on the NHS, and national infrastructure like TfL, the lack of budget towards bolstering our cybersecurity standing is a grave mistake.
“This lack of investment in cybersecurity is not just a matter of protecting data; it undermines our national resilience and public trust in an increasingly digital society. Without adequate resources to enhance cyber defences and develop a skilled workforce, the UK risks falling behind in the global race for cyber resilience.
“This shortsighted approach leaves both public and private sectors exposed to evolving cyber threats, potentially compromising sensitive information, critical infrastructure and essential services. The government’s inaction on this front will prove to cost more in the long run, as we struggle to keep pace with rapidly advancing cyber threats.”
Technology
The government will extend the Made Smarter Innovation programme, making up to £37m in funding in 2025-26. Funding for the Made Smarter Adoption programme will double to £16m in 2025 and 2026. This funded is expected to support more small manufacturing businesses to adopt advanced digital technologies. It will also enable the programme to be expanded to all nine English regions.
Furthermore, in an effort to support more small businesses’ digitisation efforts, the government will extend the SME Digital Adoption Taskforce and it will produce an interim report early in 2025. The Department for Business and Trade will is to soon announce details of a £4 million pilots package to encourage tech adoption for SMEs.
Clean energy and sustainability
Transitioning to net zero and delivering on the government’s clean energy superpower mission is central to ensuring sustainable and resilient long-term growth, according to the Autumn Budget.
The UK’s clean energy sector is set to benefit from £3.9 billion of funding in 2025 and 2026 for carbon capture, usage and storage (CCUS) Track-1 projects to decarbonise industry and contracts with 11 green hydrogen producers.
The government has set aside £125 million in 2025 and 2026 for Great British Energy, which it confirmed will be headquartered in Aberdeen, Scotland. It has also committed to providing support for the first round of electrolytic hydrogen production contracts, as a means of ‘harnessing renewable energy to decarbonise industry across the length and breadth of the UK’.
It is determined to manage the energy transition ‘in a way that supports jobs in existing and future industries’. It reiterated that, as confirmed in June 2024, the decarbonisation allowance will remain ‘in order to incentivise the sector to invest in cleaner, lower-emission technologies and will be set at 66% to maintain its cash value’.
Also, to ‘support the development and production of innovative advanced fuels to decarbonise aviation’, the government will extend the Advanced Fuels Fund for a further year.
Fuel duty
Fuel duty has been a particularly hot topic in the lead-up to the Autumn Budget announcement. As the Autumn Budget sets out, the government is freezing fuel duty and extending the temporary 5p cut for one year, at a cost of £3bn next year.
A freeze on Fuel Duty was also announced in the 2024 Spring Budget, by then-chancellor Jeremy Hunt during the previous government.
In response to this news: “The chancellor’s decision to freeze fuel duty for a further year is welcome news for the logistics sector. Nothing moves without logistics: the sector supplies our hospitals, schools, factories, shops and homes with everything they need, everywhere, every day. The sector is vital to any plans to stimulate growth across the economy, and this respite is welcome news for a sector already seeing increasing business failures over the last year.
“The sector operates on very narrow margins – often only 2.5% – with fuel representing a large proportion of the weekly operating cost for hauliers. Logistics powers every part of the UK’s economy – it is the UK’s system for growth – and today’s announcement should drive confidence in our sector’s ability to deliver for its customers. with confidence.”
Wages
Upon the recommendations of the Low Pay Commission (LPC), the government has decided to increase the National Minimum Wage (NMW) by 6.7% to £12.21 per hour from April 2025 and, at the same time, the NMW for 18-20 year olds will be raised to £10.00 per hour, an increase of 16.3%. This, according to the government, is the largest-ever increase in both cash and percentage terms.
The government also announced its intention to create a single adult wage rate, and has asked the LPC to recommend a minimum wage for 18-20 year olds that would begin to close the gap with the main Nation Living Wage rate, eventually giving them the same wage for the same day’s work.
The government also announced its decision to increase the rate of employer National Insurance contributions to 15%. The per-employee threshold at which employers start to pay National Insurance will be reduced from £9,100 per year to £5,000 per year, applicable from 6 April 2025.
To ‘support small businesses with these changes’, it is increasing the Employment Allowance from £5,000 to £10,500 and removing the £100,000 threshold, expanding this to all eligible employers. This, it has said, means that 865,000 employers will pay no Nation Insurance contributions next year.
Tony Cheetham, founder and managing director of Manchester-based shipping technology firm Shipster, said: “As an SME, the increase in employers’ National Insurance contributions will be a hard pill to swallow for us. As a growing tech company, wages are nearly 75% of our entire budget”.
Andrei Danescu, CEO and co-founder of Dexory, shared a similar sentiment: “As a company that is driving innovation and growth in the UK, we are acutely aware of how tax policies directly impact the tech sector’s ability to thrive. While we recognise that there is a need to balance fiscal responsibility with public services, the current plans risk stifling innovation and competitiveness, especially in technology and manufacturing sectors, both of which are key, fundamental and growing sectors for the UK.
“Increased National Insurance payments create barriers for deep tech businesses that prioritise reinvestment in innovation, growth and talent development. These measures discourage forward-looking investments that are essential to building a robust tech ecosystem in the UK to ensure technological sovereignty and protect future developments. The tech sector, particularly robotics and AI is pivotal for the UK’s economic future and yet this budget will curb its potential.
“A strong focus and commitment to policies that foster investment, support sustainable growth, and reward technological advancement is crucial for maintaining the UK’s position as a global leader in new tech technology and innovation. At Dexory, we are committed to our UK operations and growing the company in the UK, but we urge the government to create a more balanced approach that supports both fiscal goals and the long-term health of the tech industry.”
Dexory was amongst the winners at the 2024 Supply Chain Excellence Awards; click here to see the full list of winners!
