Automotive reaction to Budget 2023
Robbie Gray, chairman at Fueltone Pro, said: “As drivers feel the pinch from inflated petrol and diesel prices, more are turning to fuel additives to try and reduce their vehicles' fuel consumption, saving them money at the pumps.
“While the continued freeze in fuel duty in the latest Budget is welcomed, the cost of filling a vehicle remains extraordinarily high against the backdrop of inflationary pressures, the cost-of-living and the war in Ukraine. Drivers therefore should make use of products available in the automotive aftermarket to help them get the most from their fuel tanks.”
Mike Hawes, SMMT Chief Executive, said, “We face fierce international competition so it was pleasing to hear the Chancellor directly reference industrial strategy and measures to attract investment. Tax breaks for capital expenditure, which the industry has long called for, extensions to climate change agreements plus action to alleviate the high cost of living and encourage more people into work are all much-needed. Investment zones which focus on advanced manufacturing, of which automotive is an exemplar, R&D and technology are also positive steps.
“There is little, however, that enables the UK to compete with the massive packages of support to power a green transition that are available elsewhere. Indeed, the announced fuel duty freeze contrasts with an absence of measures to boost uptake of zero emission vehicles, such as reducing VAT on public charging. We, therefore, look forward to additional policy announcements that support advanced manufacturing sectors, as the right conditions will enable the investment that drives growth across the country.”
Commenting on the Spring Budget, Brian Gregory, Chairman of the Alliance of British Drivers said:
"While we welcome the extension of the 5p fuel duty cut, this Budget has done little to help drivers across the UK.
"The Chancellor could have helped ease the cost-of-living crisis by removing the outrageous burden of paying tax twice at the fuel pumps – in the form of VAT and fuel duty.
"Scrapping VAT on fuel duty is equivalent to a 10.6p cut at the pumps for drivers and would have been a real boost.
"Instead, the Government will continue to spend hardworking taxpayers money to support electric vehicle subsidies and grants for electric vehicle infrastructure which will benefit the wealthy.
"This was a disappointing Budget from a disappointing Government.”
In response to today’s Spring Budget, Hugo Griffiths, Consumer Editor at carwow, Europe’s largest online marketplace for buying and selling cars, said:
“The fact that the Chancellor has seen fit both to not increase fuel duty, and to extend the five pence-per-litre cut for another 12 months, will surely be welcomed by cash-strapped motorists, but in the grand scheme of things the Government is clearly lacking ideas in a number of key strategic areas.
“To name but a few: we are still being kept in the dark with regard to how fuel duty will be replaced once electric cars are mandated; there is also little clarity on how EVs will be made affordable for private buyers as we edge ever closer to 2030, something 66% of carwow customers think the Government should provide support for.
“Ministers also seem to have little control over how local councils are implementing divisive and piecemeal transport policies across the country, while the £200 million pothole fund is likely to be yet another sticking plaster for the country’s road network, which needs comprehensive, fundamental attention.
“All things considered, Jeremy Hunt’s Spring Statement is a thin gruel that will sustain motorists for a while, but drivers need substance and clarity that are sorely lacking.”
Sue Robinson, Chief Executive of the National Franchised Dealers Association (NFDA), which represents franchised car and commercial vehicle dealers across the UK, comments on the measures announced in today’s (Wednesday 15 March 2023) Budget delivered by the Chancellor, Jeremy Hunt.
“The Spring and Autumn Budgets, delivered by the Chancellor, are pivotal moments in the year for the Government to outline their priorities and areas of importance. Today, it's positive to see that government has addressed some key areas which impact the automotive sector, including maintaining the fuel duty freeze and the replacement of the super deduction tax with a new investment allowance scheme.
“However, it is clear that Government still does not entirely understand the significance of incentivising motorists’ transition to electric and investing into charging infrastructure. NFDA urges government to place more emphasis on financing and levelling up the electric vehicle landscape, matching the efforts and investments franchised dealers have made, and continue to make, if they want to meet their ambitious 2030 deadlines and 2050 net-zero targets.”
Corporation tax hike
The Chancellor has confirmed that corporation tax will rise to 25 percent, from 19 percent.
Sue Robinson: “Ultimately, we are disappointed that the Chancellor has not reversed the corporation tax rise to 25%. Keeping corporation tax at 19% would have helped franchised dealers to maintain the high levels of investment required to support the electrification of their vehicle stock another example of franchised dealers supporting government’s net-zero targets. This transition has forced dealers into levels of investment which has not been seen in the industry in decades.
Investment Incentive
Government is now introducing full expensing from 1 April 2023 until 31 March 2026. This means that companies across the UK will be able to write off the full cost of qualifying main rate plant and machinery investment in the year of investment.
Sue Robinson: “NFDA cautiously welcomes the replacement of the super-deduction with a new investment allowance scheme. This involves a 100% write-off of capital expenditure expenses immediately from profits. In some circumstances, the deduction may facilitate greater investment by dealerships, but this does not make up for the disincentive to invest as a result of the rise in corporation tax.”
Fuel duty frozen
The 5p fuel duty will be frozen for a further 12 months, until March 2024.
Sue Robinson: “NFDA supports the Chancellor’s decision to maintain its freeze on fuel duty, supporting UK motorists considerably. Fuel costs are still yet to return to pre-pandemic levels and costs the average vehicle owner between £1,300 and £1,800 annually. Fuel has now become a key expenditure for families in the UK and any increase would have had detrimental impacts on family finances, especially in rural areas where public transport is not a viable alternative.
“This is something we pushed for in our Budget Submission earlier this year and we welcome the Chancellor’s decision.”
Electric roll-out
Sue Robinson: “We are extremely disappointed that not a single mention of electric vehicles or charging infrastructure was mentioned in today’s budget announcement. If the UK Government’s goal is to stop the sale of new petrol and diesel cars and have 300,000 charge points in place as a minimum by 2030, there needs to be much more significant investment – and this has to be incentivised by the Chancellor in future Budgets.
"The recent announcement to introduce Vehicle Exercises Duty (VED) for electric vehicles in 2025 has reduced the appeal of buying a new electric car as motorists will no longer benefit from a tax-free purchase that differentiated it from its Internal Combustion Engine (ICE) counterpart. This sent the wrong message at the wrong time and the Chancellor still has not established a policy on electric vehicles that sends the right message. Today, NFDA believes, was a missed opportunity to create a comprehensive road tax scheme.
“Going forward, Government support will be critical to the success of the electrification of the vehicle parc in the UK. Government’s neglect to support the less affluent from purchasing an EV, a product which remains a price premium and a significant barrier to adoption, risks undermining the movement and their net-zero targets and destabilising the EV market.”
Skills shortage and Apprenticeship Levy
Sue Robinson: “We have continuously called on the Government to rethink the apprenticeship levy scheme and it is a disappointment that nothing has been announced on this, or for apprenticeships for young people in general. Businesses need help to source talent and promote employment into such a vital sector for the UK economy.”
Statement from Association of Fleet Professionals on today's Budget
Paul Hollick, chair, said:
“For fleets, this was a Budget more noteworthy for what it didn’t include rather than what it did. We’d have liked to have seen measures announced ranging from the creation of an EV charging regulator through to national co-ordination on Clean Air Zones, as outlined in our recent tax and regulation manifesto. However, there was little content that showed the Government has been thinking about business road transport.
“The one bright point for fleets was the freeze in fuel duty. An increase in 11 pence per litre would’ve been extremely unwelcome at a point in time when the economy is struggling and removing that possibility is very much welcome. Further positives are difficult to identify but a recognition that more people need to be encouraged back into the workforce, through pension changes and childcare measures, could potentially help to a degree in a fleet sector where recruitment remains an issue.”
Paul Hollick, chair, AFP
Statement from Startline Motor Finance on today's Budget
Paul Burgess, CEO, said:
“For the retail motor industry and motor finance specifically, this is a relatively benign Budget without any moves that will either noticeably boost or harm prospects. Really, it’s hallmark is an extremely measured approach, as seen in the decision to extend the energy price guarantee by three months in order to not worsen the cost of living crisis. The economy is performing just a little better than expected at the end of last year and there seems to be a mood of gently trying to ensure that trend continues, with great store placed on avoiding recession.
“It’s important to remember that it is only seven months since the fated mini-budget and this is a Budget very much about being seen to make no sudden, dramatic moves and convince onlookers that the Sunak administration is one that is, above all else, fiscally responsible. Recent news about bank collapses in the US and the plight of Credit Suisse does raise the possibility of more unanticipated shocks hitting the economy, so this cautious approach is perhaps understandable, even if there is a strong argument for a more strategic and proactive approach on growth than the measures the Chancellor revealed.”
Statement from iVendi on today's Budget
James Tew, CEO, said:
“The key economic threat to the retail motor industry over the last year or so has been the possibility that the new and used car and van sectors would be badly hit by the cost of living crisis. So far, however, effects have been limited, and the main plus point from the Budget is that the government seems to recognise that it’s important personal finances are not allowed to get much worse, as seen in the three month extension to the energy price guarantee. While they may insist that today’s measures were largely about growth, the underlying message is one of stability. This, in itself, is welcome after the various economic and social storms we have all had to weather in recent years but there is also perhaps an absence of really big ideas to get the economy moving, despite a basket of smaller scale, targeted measures designed to promote growth.”
Responding to the Spring Budget, Gordon Balmer, Executive Director of the Petrol Retailers Association, said:
“Petrol and diesel prices are still extremely volatile due to the ongoing war in Ukraine. Many motorists will breathe a sigh of relief at the Chancellor’s decision to extend the fuel duty freeze and maintain the 5ppl cut.
“We welcome the Government’s commitment to keep fuel duty rates under review and hope that they will continue to do all they can to ease the burden of high energy prices on motorists.
“As always, our members are committed to keeping their communities fuelled and fed.”