Trade bodies welcome fuel duty freeze, but warn wage increases and long-term fuel duty reform will bring economic consequences

The Confederation of Passenger Transport (CPT) and RHA have issued warnings in response to Chancellor Rachel Reeves’ 2025 Budget, noting that the coach, bus and freight sectors will have to brace for rising employment costs and long-term effects from fuel duty reforms.

Responding on behalf of CPT, Alison Edwards, Director of Policy and External Relations, says the combined impact of pay and tax policy threatens to squeeze already fragile operating margins.

She says the increase to the National Living Wage, alongside recent changes to employer National Insurance, will “intensify wage pressures across the industry, where labour already makes up more than half of bus operating costs.”

An extension of the freeze on fuel duty offers some breathing space, but Ms Edwards warns those pressures will return when the staged reversal of the 5 pence cut begins, “particularly given the government has again missed the opportunity to exempt coach and bus operators from any rise,” she adds.

Ms Edwards argues that exempting the sector from fuel duty increases would come at relatively low cost while delivering significant benefits.

“Coach and bus account for under 6% of fuel duty receipts, and exempting the sector would avoid placing £142 million per year of pressure on already tight margins, protecting operators’ ability to invest in higher frequencies, new routes and modern, environmentally friendly vehicles,” she explains. “Ensuring that essential public transport remains viable will require a realistic approach to the cost base we face, stability in long-term planning, and recognition of the critical role coaches and buses play in the UK’s economic and social fabric.”

CPT singles out road user charging for electric vehicles as the most significant long-term transport reform in the Budget. Ms Edwards says road user charging that reflects use “can be fairer” and accelerate modal shift.  “We look forward to working with government as it manages the inevitable shift from charging motorists at the pump to charging them as they drive,” she says.

A disappointing result for the hospitality sector?

UK family-owned coach holiday provider Daish’s Holidays meanwhile warns that the introduction of a UK tourism tax will add to the high tax burden on an “already over-burdened” hospitality sector.

Paul Harper, Commercial Director at Daish’s, notes that many European destinations, while levying similar charges, benefit from lower VAT rates, balancing the overall cost to tourists and operators.

Further information:

Budget will intensify cost pressures, industry leaders warn