Budget Reaction 2024
Please see below the reaction to Labour’s first budget of their new tenure. This article will be updated as we receive new comments, so keep coming back…
James Lett, Technical Editor at Autodata, says:
"The decision to maintain the salary sacrifice scheme for electric vehicles (EVs) is a lifeline for the EV adoption goals of the UK. The benefits of salary sacrifice schemes in helping people lease new zero or low-emission vehicles cannot be underestimated.
“This scheme has successfully incentivised both private and fleet drivers to switch to electric vehicles by making them financially accessible for many - especially NHS staff, police forces, and local authorities.
“Increasing support by £2bn for EV adoption is a welcome move by Rachel Reeves as we work to meet the transition deadline for phasing out combustion engine vehicles.
“For garages and technicians, this move provides assurance that more EVs will be on the roads. However, the growth of EVs is limited without skilled technicians to ensure these vehicles are maintained and safely operated. Without the necessary tools and training, EV adoption will be undermined.
“To complement this positive step, clear incentives and grants need to be implemented across the industry. These are essential to build a workforce capable of meeting the demands of an increasingly electrified market, and to give drivers much-needed confidence to transition.”
James Tew, CEO at iVendi, said:
“It’s been an unnerving few days for the retail motor industry in that the importance of the Budget has been largely overtaken by the court of appeal announcement on discretionary commission arrangements. New and used car and van sales are largely dependent on the motor finance sector working efficiently, and that decision has caused much consternation. This means what we really need right now from the government is greater clarity around how the situation will be resolved.
“Against this backdrop, the additional costs that are being placed on our businesses in the Budget look more onerous than they would’ve just a few days ago. Moves such as increasing NI on employer contributions will be taking effect just at a point in time when there is a strong wave of uncertainty passing through our sector. Added to ongoing difficulties around electrification, it is clear that this is a potentially difficult moment to be selling vehicles.”
Paul Burgess, CEO, Startline Motor Finance, said:
“Probably the most important aspect of the Budget for the motor industry is simply that it has finally happened and there were few real surprises, with almost all of the major moves flagged up in advance. There has been a long period of drift since the election and some sense that both businesses and consumers have been delaying expenditure until they knew exactly what the Budget would contain. That wait is now over.
“While Labour has taken some care to protect what it loosely terms ‘working people’ – including the surprise ongoing freeze in fuel duty – there are moves here that will unavoidably have an impact on how much people have to spend, and it’ll be interesting to see whether all of this affects the used car market in a positive or negative manner during the next few weeks and months.
“However, the biggest share of the higher tax burden is going to fall on businesses, with the increase in employers NI likely to prove especially expensive. The Chancellor would no doubt argue that such costs will be offset over time by Labour’s drive for economic growth, but the OBR forecasts are no better than middling and only time will tell whether that strategy is effective.”
Paul Hollick, chair, Association of Fleet Professionals, said:
“The big news in the Budget is the announcement on company car tax rates until 2030, something on which we have been campaigning for some time. With the massive swing towards electric cars seen in the fleet sector in recent years, there was perhaps an expectation that we would start to see benefit in kind begin to creep upwards and I these figures are probably at the lower end of our expectations. This new certainty around tax will, in our opinion, maintain the ongoing electrification of car fleets, especially in establishing a marked differential compared to hybrids. Similarly, the increased differential in first year tax rates for electric cars is to be welcomed although, being a one-off cost, will have a much more limited impact.
“The other major element is the surprise ongoing freeze in fuel duty when a removal of the five pence discount was widely predicted. Petrol and diesel prices are historically quite low but this remains good news for fleets who are working hard to keep their spending under control.
“With these two measures, it does seem like a potentially promising start for this government and its policy towards fleets. However, there remains quite a long list of issues that we would like to see resolved in the short-medium term – ranging from 4.25 tonne electric van derogation through to ongoing difficulties surrounding the ZEV Mandate. Conversations covering at least some of these problems are underway and we await their outcome with interest.”
Asif Ghafoor, CEO of national EV charging network Be.EV:
“We welcome the news about the maintenance of incentives for electric vehicles in company car tax which account for 40% of all vehicles on the road. This is the easiest and quickest way to accelerate the EV transition is to get companies and employees to switch to EVs en masse.
“The £2 billion investment into the EV sector manufacturing is also welcome. There’s no need to spend £200 million on charging – key charge point operators in the private sector have already committed £6bn to drive the sector forward. Anything which gives us more confidence to deliver this funding is welcome.”
“The only way to speed up the EV transition is to get people to feel good about EVs again. We don’t need money but the next thing the Government to do is to finally bring the 2035 ban back to 2030 as promised and get the transition going even faster.
Aidan Rushby, founder and CEO of Carmoola, commented:
“The Chancellor’s commitment to maintaining favourable Benefit in Kind tax rates for electric vehicles (EVs) is a positive step toward accelerating EV adoption in the UK, and the promise of more favourable first-year tax rates for EVs compared to petrol and diesel vehicles strengthens the incentives. However, as our recent analysis shows, there are still significant challenges facing the EV market, with the average electric car owner seeing a depreciation of nearly 50% within the first three years - equating to an average loss of £11,225.
“Our recent analysis of over 40 million car sales indicates that EVs, on average, lose 21% of their value in the first year alone, underscoring that depreciation remains a serious concern for buyers and fleet owners alike. While the budget incentives are certainly helpful, they address only part of the broader picture. To truly catalyse the EV industry, further measures are needed to improve long-term value retention for electric vehicles. By building confidence in EVs' resale value, we can better support consumers and encourage wider uptake, essential for the UK’s sustainability goals.”
Autumn Budget statement: IMI Response
The IMI is delighted that the Chancellor has, today, acknowledged the importance of automotive in the industrial strategy with a £2bn commitment for the sector, supporting the growth of the electric vehicle parc. The IMI believes it is critical that a share of this commitment is allocated to training and continuous professional development for those working both inside and outside the factory gates, alongside manufacturing infrastructure.
The professional body for people in automotive also welcomes the government’s commitment to further education with a £300 million increase in funding as well as the increase in Employment Allowance – to £10,500 – for the smallest employers.
The IMI is, however, disappointed by the much-rumoured increase in employer NI contributions from April 2025, combined with a reduction in the secondary threshold to £5,000 pa. These changes are likely to have a significant impact on costs for small businesses that operate in the automotive sector, which is already facing a skills gap of 20,000+ vacancies.
These additional costs are likely to dampen investment in training and continuous professional development and impact the ability of the sector to be ready to support the government’s decarbonisation targets.
Barney Goffer, UK Product Manager at Teletrac Navman, commented:
“The government was very clear that this was going to be a tough budget with more taxation than previously mooted and it was.
“While the frozen fuel duty is a pleasant surprise, the new regulations around National Insurance Contributions (NIC) are going to be a challenge for many fleets.
“Kickstarting economic growth relies on multiple sectors operating efficiently and cost-effectively – the transport sector being a major factor in this.
“While the decision for employers to pay NIC on anything over £5,000 when previously it was £9,100 could help raise a large amount, it means increased pressure for fleets, especially the transport sector which is already running on low margins to absorb.
“The obvious thing to do would be to pass the rise in tax onto the customer but in a highly competitive transport sector there’s always someone willing to run at even lower margins.”
Steve Horne, CEO of GSF Car Parts says:
“Following the announcement of the 2024 Autumn Budget today, it’s important to understand what this means to the wider automotive industry.
"Looking at ramifications for the automotive industry, the government has announced a significant investment of over £2 billion specifically for the automotive sector, as part of its broader 'modern industrial strategy' aimed at unlocking growth in key industries.
“This funding is expected to enhance supply chain resilience, crucial not only for GSF Car Parts as a parts distributor but also to our partners who are suppliers and manufacturers. This should encourage the improvement in logistics and support domestic production capabilities.“At GSF Car Parts, we are excited about this commitment, especially as we have experienced a year of growth as we currently employ 3,000 people across the UK. This investment aligns with our mission to provide quality products and services while contributing to a healthy automotive future for the industry.”
Peter Golding, managing director at the FleetCheck said:
“We’ve seen a trend develop during the last year or so with a wave of new PHEVs arriving that have a much-increased electric-only range. This has made them little more expensive from a personal tax point of view than a full battery electric vehicle (EV).
“Quite a few drivers have seen these cars as a useful stepping stone to going fully electric, sidestepping concerns about range anxiety and the charging infrastructure, and they have made their way onto an increasing number of choice lists.
“It’s pretty clear from the Budget that the government wants to strongly discourage this line of thinking. While there is probably only a couple of percentage points difference in benefit in kind between an EV and PHEV for a driver today, that rises to a difference of 7% and 18% in four years. Not many people are going to want to pay that bill.”
Peter added that the move appeared to bring government policy more closely into line when it came to electrification.
“With the recent clarification that hybrids would be allowed to stay on sale until 2035, there was arguably a slight pull against zero emissions mandate targets. Now, it looks like their thinking is much more consistent, especially the fact there will be a high, flat rate for all PHEVs from 2028/29. If you are getting a company car, the government wants it to be an EV.
“Where the new wave of PHEVs probably remain likely to find sales is in the private sector. Individual consumers are showing quite a high level of resistance to EVs for a variety of reasons and PHEVs provide a solution, as long as people are willing to pay the newly increased first year vehicle excise duty.”
Easy2Recruit founder and CEO Ambi Singh said.
Regarding the £2 billion investment as part of the government’s modern industry strategy. “This funding will be vital to help the sector move towards full electrification, but it is only part of the answer for the skills crisis,”
Further support for education was also part of the mix, including a £300 million investment in further education. “For the sector to be able to support the growing EV car parc,” said Ambi, “what will count in the long term is continuing investment in training, and measures to encourage more young people to enter the sector, making this a step in the right direction.”
An increase in the minimum wage for over-21s was announced too, which will go up from £11.44 to £12.21 per hour from April. At the same time, the hourly rate for 18 to 20-year-olds will go up from £8.60 to £10. Meanwhile, Employment Allowance, which enables small companies to reduce their National Insurance liability, will rise from £5,000 to £10,500. “While garages will need to pay some staff more, there is some good news too with Employment Allowance going up too,” said Ambi.
“Ultimately,” said Ambi, “this reflects the reality that the sector will need to invest in growing the next generation of techs at a much higher rate than has been the case in recent years if it wants to close the skills gap.”