Comment
Theo de Pencier, Chief Executive, FTA
Transport deserves no less than the banks
In the last few weeks, concern about the state of the economy has eclipsed all else, both for industry and individuals. With the ongoing financial crisis making it hard to borrow and even harder to find a safe haven for any spare cash, company share prices fluctuating wildly and the UK already feeling the hard pinch of recession, there are clearly some very tough times ahead for all.
Against this backdrop, the cost of a litre of diesel may seem almost insignificant, perhaps. But precisely because of the current economic climate, it's vital that the Government cuts the road transport industry some slack in its forthcoming pre-Budget statement.
We've asked the Chancellor to give us a package of measures to ease heavy goods vehicle operators' tax burden, from abandoning the planned increases in duty on diesel for the next two years to freezing truck VED for the next three. We are also, of course, continuing to push hard for a commitment to decouple the duty paid on fuel used by commercial vehicles from that levied on other motorists.
Quite how the Chancellor will react to our submission is impossible to say. But with truck operators facing annual cost inflation of 15% and with the costs of so many other sectors largely dependent on the cost of transport, it's obvious that the commercial vehicle community is as deserving of Government help as any other group in the economy - and possibly a lot more so.
One of the interesting issues to have come out of the current economic crisis, of course, is just how fast the Government can find huge sums of money to bail out important sections of the economy when it chooses to.
So, if the Government can find billions of pounds at the drop of a hat to bail out the banks - even though the banks themselves are widely regarded as being the architects of many of our current economic woes - we don't really see why it can't find the money required to deliver the various tax measures we have outlined for the distribution sector - a sector that most definitely is not responsible for many of its current troubles.
The Chancellor might, of course, take the opposite view and decide that he needs to refill the Treasury's depleted coffers, after his recent spending spree with the banks. But adding to the industry's tax burden would be a retrograde step, since additional transport costs will ultimately get passed on to consumers, fuelling inflation and increasing the negative effects of our current economic downturn.
As the Chancellor already knows from his days as Secretary of State for Transport, supporting the UK's road transport industry is tantamount to supporting the wider UK economy. Supporting the wider UK economy is something both Alistair Darling and Gordon Brown have promised to do several times of late. Let's just hope that this time, they really mean it..
Robin Meczes, Freight Editor
Time to close the door on empty rates fiasco
Demolishing a building just so you don't have to pay tax on it sounds like a pretty radical step - but that's just what's started to happen with some unused warehouses after the changes earlier this year to empty property rates (see page 19). We shouldn't be surprised, perhaps - various groups have been predicting this exact outcome for months, not least leading property consultancy Lambert Smith Hampton, whose survey earlier this year of occupiers, investors and developers showed up serious concerns about the Government's understanding of the industry and suggested that a two-tier property market would develop, with secondary stock being demolished, rather than renovated, if it did not attract occupiers quickly. And that's exactly where we are today.
But it's not just secondary stock that's being removed by the tax, if the property industry is to be believed. New developments and regeneration projects, too, are being shelved, according to groups like the British Property Federation, leading to less choice for occupiers. And little wonder, you might think, when the potential rates bill for an empty 10,000 sq m warehouse could be in the order of £250,000 a year.
The irony, of course, is that the removal of empty property rates relief in April was supposed to encourage landlords to reuse, re-let or redevelop empty properties more quickly, making property availability better for occupiers and so bringing rents down.
There is some evidence of rents becoming more negotiable in some cases - but whether this is really the result of the removal of empty rates relief or is simply a reflection of the current economic climate is another matter entirely.
Even if rents do come down in the short term, landlords who face months of costs on empty property will eventually seek to recoup those costs - assuming they survive long enough to do so - from subsequent occupiers. And that, combined with the upward pressure on prices that will surely result from fewer properties being available overall, can only be bad news for logistics firms in the longer term.
