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Budget 2015: Industry reaction

Date: 19 March 2015

BusinessCar rounds up the fleet, leasing and automotive industry's reaction to the Budget 2015 annoucement.

Industry reaction

David Bizley, RAC chief engineer

"Mr Osborne has clearly taken an opportunity to maintain the truce in the "war on motorists" whilst tying the hands of any new incumbent of No 11. Freezing fuel duty beyond the end of this parliament is therefore a very shrewd move as it would be extremely unpopular for any future chancellor to unfreeze it.

"We believe the duty freeze has made an important contribution to the economy and hope that any future chancellor will now understand its significance and therefore think twice before reverting to regular inflationary increases. The above inflation fuel duty escalator that operated between 1993 and 1999 is the primary reason, of course, that we now pay nearly 70 per cent in tax on every litre of fuel we buy at the pumps.

"While the hancellor has cancelled September's scheduled fuel duty increase we would ideally have liked to see him scrap the duty escalator altogether."

Rupert Pontin, head of valuations, Glass's

"This seems to be a structured, sustainable and fiscally neutral budget with some significant gimmicks around savings and personal taxation.

"Interesting and welcome support for the UK Automotive Industry in relation to the £100 million support for the development of Autonomous vehicles to keep us ahead in this area of development for this market.

"Freezing fuel duty is also helpful and support for the green and hybrid technology from a business taxation perspective also an interesting support of this technology that we know we must embrace to meet European targets."

Mike Hawes, SMMT chief executive

"The £100 million injection into connected car research, development and testing - to be matched by industry - will provide a vital boost to the UK automotive industry and put us ahead in the global race to build the cars of the future. It is tremendous news that government has adopted SMMT and industry's call for this investment - it lays the foundations for the UK to become a centre of excellence in intelligent mobility, and underlines the importance of automotive engineering to the UK economy.
 
"In addition, we're pleased that government has recognised the importance of China, which is now the automotive industry's biggest export market. Sales of British-built cars there have grown seven-fold in the past five years. This funding will help us to further capitalise on this opportunity, and strengthen the significant work SMMT is doing to grow the UK automotive presence in China."

Matthew Dyer, Leaseplan UK managing director

"This was the chancellor's final budget before the General Election in 50 days, and it was consistently declared as a Budget moving from "austerity towards prosperity".

"For the fleet industry, there was the expected and welcome freeze on fuel duty, as well as company car tax and some encouraging news on low emission vehicles.

From a sustainability perspective, this Budget could have gone further and contained more incentives to promote an even larger uptake of environmentally friendly vehicles.

"To meet the UK's ambitious targets for C02 emissions, we will need significant numbers of drivers to switch to alternatively-fuelled vehicles.

"That said, the Chancellor did announce plans to invest £100 million to help the "brilliant automotive industry" stay ahead in terms of driverless technology and the systems required to implement and adopt the technology - such as telecommunications. In a positive move, he also pledged encouraging measures for a new generation of Low Emission vehicles by increasing company car tax more slowly than previously planned. Rates for traditionally fuelled vehicles will increase by three percentage points."

Richard Schooling, CEO, Alphabet

"Overall, the measures announced by the Chancellor are positive and demonstrate the Government's commitment to building and supporting a sustainable travel and transport infrastructure that supports not just current, but future needs. We welcome the fact that company car tax on Ultra-Low Emission vehicles will increase slower than previously suggested, but are disappointed that the Chancellor has decided not to further support initiatives that encourage the uptake of greener business vehicles.

"The £100 million-plus of funding for research and development into intelligent mobility will play a huge part in shaping the future of business mobility. It's also good to see support for the use of innovative transport measures such as car clubs and car sharing initiatives, which will not only help to improve sustainability and reduce costs, but provide a flexible and convenient way to keep employees moving."

Gary Killeen, fleet services commerical leader for GE Capital

"For fleets, the newly announced benefit in kind taxation rates for 2019-20 are the main area of interest. They represent quite a significant increase on the rates for 2018-19 and 2017-18 that were announced in last year's Budget.

"This will have a direct impact on the amount of tax paid by certain drivers in certain vehicles. For example, if you chose a 120g/km petrol car after April of this year and your employer runs a four year cycle, the percentage of list price on which you pay tax will rise from 19% to 28% over time.

"Even drivers of vehicles with lower emissions will be affected quite dramatically. If you opted for a car with CO2 emissions between 51 and 75g/km the increase over four years would be from 9% to 19%.

"Managing these increases will mean that employers must regularly look to their choice lists and ensure that they are offering drivers the very lowest CO2 options for their company cars in order to minimise employees' tax bills and their own National Insurance costs. We expect this to be a major part of fleet strategy in the coming years.

Kyle Trunan, head of marketing at Epyx

"It has been many years since there has been genuine news for fleets in a Budget. We have become accustomed to a gradual refinement of existing policies such as the benefit in kind taxation system. This Budget very much continues along that line of thought. While the newly announced 2019-20 BIK rates are something of a jump, they at least represent a well-signposted plan to encourage lower emission company cars through to the end of this decade.
 
"A much more interesting question is whether this policy of stability will continue after the General Election? We are told that the result is likely to be close and that new coalitions could be created. While the attitudes of the major parties towards fleets are well known and probably unlikely to change dramatically, the attitudes of smaller ones that may suddenly hold a large amount of power is pretty much unknown."

Claire Alderson, sales and marketing manager at FuelGenie

"Whilst the scrapping of September's planned fuel duty increase is undoubtedly positive news for SMEs, we would have liked to have seen an actual reduction in fuel duty to help keep prices down in 2015 and into 2016.  Fuel is one of the biggest expenses for many SMEs and this reduction would have been a welcome boost to keep economic growth on the upward curve.  We would like to see the Government hold back any planned increases over the next few years so the economy can continue to gain in strength after the recent tough economic conditions.
 
"The UK's SMEs and MMEs account for approximately 70% of our overall economic activity* and they have a major impact on the Country's economic well-being.  The move to abolish the annual paper tax return by 2020 will also help to simplify tax assessment.  This will benefit businesses as they will no longer have to rush to fill out end of year returns and spread the cost of tax by instalments throughout the year."

John Leech, head of automotive at KPMG

"The £100m investment into developing driverless cars will be warmly received by the automotive industry. The UK is well placed to develop driverless cars compared to other EU countries. Pilots of the technology are already underway in Greenwich, Bristol, Milton Keynes and Coventry and we have Europe's finest independent testing facilities for this technology at MIRA. Driverless cars will reduce congestion and improve safety and this investment will help to unlock these benefits in the next decade.

Simon Oliphant, Chief Executive of Hitachi Capital Vehicle Solutions  

"George Osborne's final Budget before the General Election was preceded by a review of his performance to date, starting with his first emergency budget in 2010. If one thing was clear going into today's Budget, the chancellors sixth in office, it was going to be one with 'no giveaways or gimmicks.
 
"Clearly, Mr Osborne needed to prove ahead of the Election that the Conservatives are the right party for the job, and Britain's economy is in safe hands.
 
"Hitachi Capital was pleased to hear that, although there were no bids to buy votes, there were sensible measures put in place for individuals, SMEs and businesses alike. Cancelling the planned fuel duty increase in September will be welcomed by millions of drivers on Britain's roads, with the chancellor claiming they could save '£10-a-tank with the Tories'. Cuts to tolls on the Severn Bridge crossing will also be good news for thousands that use it every day.

Edmond King, AA president

"The Coalition has done its 'fuel duty' by shielding drivers from some of the impact of volatile fuel prices over the past four years by freezing fuel duty and we welcome the further freeze and cancellation of the scheduled fuel duty rise for September 2015.  
 
"With petrol and diesel prices surging and falling by more than 35p a litre since 2010, the continued four-year fuel duty freeze allows the Coalition to dodge the fuel-protest bullet."

Tristan Watkins, UK country manager for BNP Paribas

"The AIA proved its worth in encouraging business investment.  While it is promising that the Chancellor says an allowance of £25,000 is too low, businesses would prefer greater clarity for next year.
 
"Many businesses would prefer the allowance to be kept at a six figure sum; they are feeling more confident now and want the ability to make absolutely transformative investments.
 
"We are concerned that a significant reduction in this allowance would have a negative impact on investment."

David Brennan, Nexus Vehicle Rental CEO

"Whilst there were no big surprises in today's announcement, it seems to be broadly positive for both business in general and the fleet sector.

"The promises to invest more in research and development of low emission vehicles and in driverless vehicle testing demonstrate a commitment to helping Britain become a leader in vehicle innovation and technology which can only be beneficial to our motorists and fleets.

"The news that company car tax will increase at a slower rate than planned is a welcome bonus to the businesses who rely on these vehicles to keep their operations running efficiently and I'm pleased to see small business rate relief extended once again.

"Fuel duty continues to be a key subject of discussion and the announcement that the planned September increase has been cancelled is particularly encouraging for both Britain's motorists and the many businesses for which fuel is one of their biggest operating expenses.

"On the whole we are in a positive economic position. Companies are growing and developing, consumer confidence is increasing and it's important that this continues. Of course, the election in less than two months' time could change everything so it's vital the Government ensures the necessary measures remain in place to keep the wheels of our economy turning."

James Hookham, FTA Managing Director of Policy and Communications

"FTA members will be pleased and impressed that two issues raised at our Driver Crisis Summit have been so swiftly addressed.  Speeding up driving test bookings for truck drivers and medical assessments will help us get qualified drivers on the road quicker and more reliably helping industry address its shortfall of 60,000 drivers. We look forward to seeing this implemented as soon as possible."

James MacColl, Campaign for Better Transport's Campign Director

"The north of England needs a modern, integrated and sustainable transport network and so we welcome the announcement that Transport for the North will shortly publish an interim report, which must set out how the city regions will be working with local authorities and others to develop the rail network across the region, get the most out of investments being made in electrification and new high speed lines, and develop smart ticketing."

Mel Dawson, ALD Automotive managing director

"Just 50 days away from the General Election, Chancellor George Osborne has delivered his sixth Budget that shows an easing of austerity with positive signs for the UK economy.
 
"For fleets, the Budget brought good news in the form of the much-welcome freeze in fuel duty although the changes to company car tax rates that were also announced will mean that fleets will need to stay ahead of developments in ultra low emission vehicles (ULEVs)."



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