Budget prompts haulier exodus

The rise in fuel costs brought about by changes in the Budget has cast a shadow over UK distribution, threatening a shakeout within the haulage industry.

According to observers, the 13 per cent rise in duty has rendered UK companies less competitive than their European counterparts, and British haulage firms are finding themselves ill equipped to absorb the rising costs.

A representative of Essex freight firm Harwich Express said traditionally the extra cost would be passed straight on to the client, but this was not possible because supply of services was currently outstripping demand.

He also said the Chancellor's decision had rubbed more salt into wounds sustained by UK hauliers last year, when the market was deregulated across Europe. European operators are allowed to load up with much cheaper fuel on the Continent and then massively undercut UK firms.

It is understood that Eddie Stobbart, one of the UK's largest hauliers, is prepared to register its operations outside of the UK. The Road Haulage Association (RHA) is actively encouraging such moves.

Meanwhile, outsourcing arrangements between financial institutions and service companies such as EDS and First Data Resources (FDR), have been tightened up after the government's decision to close a loophole which meant that companies not paying VAT on credit management services, are now liable to do so.

The move is seen as a pre-emptive strike by the government which is being challenged in court by FDR over collecting VAT on financial management services. The case is due to be held next month.

See Budget feature, page 24.