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Summer Budget: Industry reaction

Date: 08 July 2015   |   Author: Daniel Puddicombe

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

James Stamp, head of Transport at KPMG

"In the last budget, the Government announced a major road investment program worth £15billion. Today, the Chancellor announced that road tax (VED) income will be "ring fenced". This provides some clarity about where funding for the ambitious road projects will be found.

"However, we note that while road tax raises around £6 billion per year, this is dwarfed by income collected from fuel duty which is around £27 billion. We believe that more of this income should be reinvested in roads and transport infrastructure in line with the Chancellor's statement that money raised from drivers should be spent on the roads they drive on."

Paul Lippitt, principal consultant at Lex Autolease

"It is pleasing to see that the fuel duty freeze planned for September will still go ahead. This should go some way to mitigate the impact on British businesses that are already burdened by some of the highest fuel prices in Europe. We would like to see the Government go even further and take steps to reduce fuel duty to ensure that firms are not priced off the road altogether."

Matt Dyer, Leaseplan UK managing director

"For the fleet industry, there was the expected and welcome freeze on fuel duty, some encouraging news on low emission vehicles, and the fact that no one will pay more tax for a car that they already own.

"What's more, there was good news in terms of economic growth with news that the UK is one of the fastest growing economies in the developed world.

"The Office of Budget Responsibility revised its growth forecast again, saying the economy will grow 2.4% this year, 2.3% in 2016, before rising again to 2.4% in 2017, and for the rest of the decade.

"This growth is reflected in the most recent figures released by the Society of Motor Manufacturers and Traders (SMMT), which recorded the strongest six-month period to date. Fuelled by fleet growth, 1.3 million car registrations were recorded between January-June 2015 alone."

Ashley Sowerby, managing director at Chevin Fleet Solutions

"Fleets should probably take a good look at the way in which the proposed increase in the first MoT from three to four years affects their risk management. For those that operate on replacement cycles of more than three years, it could create a potential weak spot.

"For example, you might have a high mileage vehicle that has covered perhaps 75,000 miles after three years which, while it has undergone regular maintenance, will not be required to pass an MoT for another year. From a duty of care point of view, that vehicle would represent an increased risk and fleets would perhaps need to ensure that they had procedures and arrangements in place that recognise that fact."

Jenny Powley, RAC spokesperson

"The changes to VED bands will have an impact on the total cost of ownership, which will have to be picked up by the company when fleet managers are purchasing new cars from 2017.

"Fleet managers have been proactive in encouraging drivers to think about cleaner cars by going for vehicles with low C02 emissions which have zero or very low rates of road tax.

?"But there is now a big question mark over how the new changes will affect company car drivers' inclination to go for low carbon dioxide emitting, fuel efficient vehicles. ?"For the first year of ownership of a new vehicle, incentives will still exist to select low emitting vehicles but thereafter, a flat rate will apply to most vehicles.

"This may raise questions about how companies will make purchasing decisions when it comes to new vehicles in the future. ?"We hope the new regime doesn't undermine the major progress that we are making in reducing carbon dioxide emissions."

James Tew, chief executive officer at iVendi

"There are two developments in the Budget that could affect the motor trade. The first is the new VED regime. The Chancellor is probably right in stating that there are increasing numbers of new car buyers who have become used to paying no VED and that the issue needed addressing in the medium-long term from a revenue point of view.

"However, detailed analysis will be needed to work out if it will advantage or disadvantage any particular types of vehicles in the new and used car sectors. The second is the potential extension to four years of the MoT test. This could have a definite impact on workshop revenues as it would mean fewer visits by the customer and their vehicle to the dealership and could a place an even higher emphasis on the importance of customer retention."

Kyle Truman, marketing director at Epyx

"Potentially the most interesting development in the Budget from a fleet point of view is the proposed extension of the first MoT from three to four years. Effectively, this would mean that the majority of cars owned by fleets would never need to be MOT'd because they are on shorter cycles than four years, which is a definite gain in terms of both costs and reduced hassle surrounding defleeting."

Greenpeace director Dr Doug Parr

"The VED changes could provide less incentive for the low carbon vehicles that, ironically, the UK automotive sector is a leader in".

"It diverts money into roads at a time when health and best interest is served by encouraging active travel like walking and cycling. This feels like a very 1980s approach."

Jon Lawes, managing director of Hitachi Capital Vehicle Solutions

"We were pleased to hear the Chancellor kept his word from the last Budget, announcing fuel duty will remain frozen for 2015. We also welcomed the introduction of the new Roads Fund to support the UK road network; however the method to feed this fund by the way of a new Vehicle Excise Duty will undoubtedly divide opinion."

Edmund King, AA president

"Drivers shouldn't  be dancing in the streets or at the pumps due to a promised freeze in fuel duty. The sting is in the tail. The Insurance Premium Tax increase on the average car insurance policy is still equivalent to a fuel duty increase of almost 2p per litre. Either way drivers are being hit in their pockets. These are outrageous hikes in tax which could well backfire."