The recent budget by the UK government has been hailed as a ‘milestone in history’, but the implications for business, particularly as a result of changes to tax and employer National Insurance contributions (NICs) are considerable. Wayne Chapman, UK CEO of Staci, discusses this, the positives and the challenges, and what the impact on UK logistics might be.
“We predicted changes to NICs – but we definitely didn’t expect the scale and size of the changes that have been made” said Chapman.
According to UK Chancellor Rachel Reeves, the autumn budget will raise an additional £40bn in taxes. £25bn of this will be funded by two key changes to National Insurance; increasing Employer NICs by 1.2% to 15% of salary, and reducing the threshold when these NICs are to be paid from £9,100 to £5,000. Furthermore, the National Living Wage is set to rise by 6.7% and plans to in time equalise pay for under-21s too.
These changes are set to take place in April 2025.
“The pace of these changes is quite staggering.” said Chapman. “Businesses both inside and outside of logistics like ourselves typically work to investment planning cycles from 5 to 10 years, so considerable changes arriving in 5 months is a difficult one for any business to navigate. We expect the impact on our business to be £1m in 2025 – approximately 2% of our business”.
There are some good news for logistics. Fuel duty was frozen for the 13th consecutive year, maintaining the previous 5p reduction. There will also be a £500m increase in the roads budget to prioritise fixing potholes across the UK road network. Updates to the rail programme will include funding for tunnelling HS2 to Euston, and improving both Transpennine services and links between Oxford and Cambridge.
“The UK is a densely populated country, and any investment to our transport infrastructure is welcomed to improved the transport of goods” Chapman commented, adding “this is good for business and the planned to invest this quickly will be good for the short term too”.
Chapman also complimented the focus on productivity targets “In business we are continually looking for ways to optimise and increase our efficiency – we welcome the news that will help ensure the funds raised will be spent wisely, and with real outcomes”
With 35 years experience in the UK logistics market, and as part of EUR4bn delivery expert bpostgroup, Staci offers considerable resilience to brands and retailers looking for a long term fulfilment and delivery solutions partner. A business built on creating efficiencies for clients in the UK and around the world, Staci is a flexible fulfilment partner that is focussed on continually improving and evolving.
News of investment into logistics will hopefully mean brands and retailers will be supported in their efforts to deliver a great experience to their customers across the UK – the ambition would be that this helps improve delivery lead time, and helps reduce the overall cost for final mile delivery companies who can then reinvest into improving services further and the transition towards ever more sustainable networks. There is feeling across the wider logistics industry, particularly rail, about whether these investment commitments go far enough.
Discussing the changes to NICs, Chapman said “Anything that increases wages for individuals we’re really supportive of. Staci has paid a normalised adult living wage for all, including under 21s, for many years, and having been certified and official Great Place To Work TM for 2 years we’ve got a great track record for engagement. For other companies not there yet, such as those in hospitality, there really needs to be a plan to smooth that transition”
Wayne also commented on the overall European economic position “As a fulfilment business with over 60 Fulfilment Centres across the UK and Europe we help brands deliver across the continent – as well as further afield into Asia, US and Australia too with our sites there. In the UK, as hard as it may feel, we do have to remember we are actually lighter than some of our European colleagues in terms of taxation. However, as previously mentioned, the pace of when these changes are expected to be implemented are the most difficult challenge we’ll overcome”.
So, what’s the impact for brands and retailers – and importantly how can business like Staci help support logistics for brands and retailers facing changes to their cost base.
“Staci helps brands become more efficient in a number of ways” said Andrew Scanlon, UK Head of Sales and Marketing for Staci. “Brands currently insourcing can outsource to Staci to immediately lift the employer impact by taking on that responsibility on their behalf – and because we operate 7 share user fulfilment centres in the UK, we’re able to fulfill on a much more efficient and competitive base as we eliminate resource waste.”
Scanlon continued “It also means clients can operate on a pay-as-you-use basis – forget employer responsibilities, warehouse rent, rates, utilities. They’re financial commitments and timely to manage. Staci makes fulfilment easy – especially when brands have complex supply chain requirements, that’s when we really make the greatest difference”.
You can stream the full episode of ‘Wake Up To Money – The Budget: Trick or Treat?’ wherever you listen to podcasts, or find it on BBC Sounds here: https://www.bbc.co.uk/sounds/play/m0024f2h