Further fiscal help on way hints Hoon
09 December 2008
Author: Tristan Young
Talking exclusively to BusinessCar, transport secretary Geoff Hoon has hinted the Government may give more help to industry to survive the credit crunch than was revealed in the Pre-Budget Report.
Commenting on the PBR, Hoon said: "What we're saying is that there's real money on the table and there may be more to offer than the 2.5% VAT reduction."
While the Government cannot set VAT lower than 15% under EU rules, the comments coincide with reports that business secretary Lord Mandelson is considering requests for help from UK car manufacturers.
Hoon spoke to BusinessCar after addressing the SMMT's annual dinner at the end of last month, in which he said: "Our priority must be to restore consumer confidence."
Commenting on the long-term goals of the Government, Hoon said in his speech: "With climate change we need to see a step-change like we've seen with vehicle safety. We need to see the transition to a low-carbon economy."
Responding to the Pre-Budget Report, Alison Chapman, tax partner at accountancy giant Deloitte, said: "The temporary VAT cut will reduce the cost of a car to a firm that doesn't get the VAT back, but will give a temporary benefit to the VAT disallowed by a company that rents a car. We've not had time to model the effects on the lease/buy decision but I'd be surprised if it affects the answer in most cases."
Chapman believed the biggest surprise of the report was the changes to VED, which increased the amount paid for low-CO2 cars from April.
"VED on 101-110g/km cars was to be £20 and is now £35 - this is a huge increase in percentage terms.VED for 121-130g/km cars was going to be £90 and is now £120 - that's an increase of a third," said Chapman. "There will still be a big difference between the low- and high-emission cars, but the incentive to drive low-emission cars is not as great as we thought."