Muted industry response to muted Spring Statement

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The UK interim budget, known as the Spring Statement, had little cause for cheer within its pages. The star of the chancellor Rishi Sunak, in ascendency during the pandemic, has been occulted by the body of distain orbiting around him after a lack-lustre financial speech last week. It’s not just political opponents who have picked holes in his economic tapestry. It has also been hard to find a satisfied voice outside the corridors of power.

Disappointingly, there was no direct mention of the rail freight industry in the chancellor’s speech to the House of Commons. Indeed, scrutiny of the whole 54-page document makes no mention whatsoever of the industry that was repeatedly praised for carrying Britain through the darkest days of the 2020 lockdowns, and delivering the logistics effort to keep the supermarkets stocked. In an economic climate that teeters on the brink of a destructive inflationary cycle, the like of which has not been witnessed since the 1970s, the backbone of Britain might have expected some support. None was forthcoming.

Trucks favoured, not trains

The reduction in fuel duty will of course make diesel fuel less expensive, but the chancellor chose to note that this temporary twelve-month cut would represent a saving worth around 100 pounds for the average car driver, 200 pounds for the average light goods van driver, and 1500 pounds [1800 euro] for the average truck haulier, when compared with uprating fuel duty in 2022-23. That though does little to mitigate the costs of electricity – a point not lost on the rail freight industry.

Chancellor Rishi Sunak surrounded by his cross-party parliamentary friends (HM Government)

It is only a matter of months ago that some rail freight operators were forced to review their use of electric traction, as the differential between that and fossil fuels widened and threatened to become uneconomical. While few voters would argue publicly with a cut in fuel duty (tax by another name) it does seem at odds with government-mandated zero-carbon initiatives. To encourage hydrocarbon consumption in the transport sector, which has been consistently blamed for emissions issues, seems at best short-term planning, and at worst plain political expediency at the expense of environmental stability.

Rail industry unimpressed

Rail industry insiders have been similarly unimpressed. “the Chancellor’s Spring Statement could have provided more certainty for key economic sectors like rail”, read one reaction. “Certainty has little financial implication for the Government but really does play a crucial part in supporting rail sector jobs and investment.”

Not rail freight sector profits forecasts, but the rate of inflation in the UK (Office of National Statistics)

“Whilst there were of course many areas for the Chancellor to address, the fact that rail is not mentioned anywhere in his speech or supporting documents is concerning”, said Darren Caplan, Chief Executive of the Railway Industry Association. “When one considers rail contributes 43 billion pounds [51.6 billion euro] in economic growth, sustains over 700,000 jobs and generates 14 billion pounds [16.8 billion euro] in tax revenue for the UK.”

Further scrutiny expected

In the government’s defence, global factors are also blamed quite extensively for the lack-lustre budget. “Consumer Prices Index inflation has risen to a 30-year high in recent months”, writes Sunak in his statement. “This has primarily been driven by global factors outside the government’s control, including continued disruption to global supply chains and higher global energy and commodity prices.”

With the Rail Freight Group holding its annual Scottish conference in less than a month, at a venue right next door to the Scottish Parliament, it is more than likely that the chancellor’s rail-free speech will come under further industry and political scrutiny. That would not be the expediency the chancellor would desire at all.

Author: Simon Walton

Simon Walton is RailFreight's UK correspondent.

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