Budget 2020 – final round-up of analysis and comments

Michael Woodward, UK automotive lead at Deloitte: “With the UK on the cusp of large scale adoption of electric vehicles, the Chancellor has today announced a £500m investment package to support the roll-out of a fast charging network.

“Our most recent research shows that access to charging is the number one barrier in stopping consumers switching to electric. Whilst a good start has been made, more investment will be needed in order to fully prepare for the anticipated growth in demand for electric over the next ten years.

“As well as providing investment, additional guidance is now needed to lead the way in providing a more joined up, long term strategy around charging infrastructure. This will no doubt include providing incentives for private companies to invest in it.”

Financial incentives for Electric Vehicles

“The decision to extend the plug-in car grant to 2022-23 is a welcome addition to this Budget. As consumers continue to make the switch to electric vehicles, and with around 30 new models being launched in the UK this year, we are on the verge of a tipping point, which could see EVs enter the mainstream.

“Financial incentives have proven to be a key factor in driving EV growth in countries like Norway and the Netherlands, aided by additional incentives such as priority parking spaces and city access. A similar strategy in the UK could help stimulate further demand.”

Incoming company car tax changes

“Today the Chancellor confirmed company car tax rates for the next five years, providing a clear financial incentive for businesses and their employees to switch from fossil fuels to electric. As previously announced, the rate of company car tax available on fully electric vehicles will fall from 16 per cent to zero per cent for the next tax year, rising by one percentage each year for the subsequent two tax years before being frozen at 2% for a further two tax years. Based on our calculations, this could result in an employee experiencing savings of around 95 per cent by choosing electric as their next company car, over a comparable diesel vehicle.

“Today’s announcement puts businesses in a unique position to enable and accelerate the move to electric vehicles. The success of this scheme in replacing higher emission petrol and diesel vehicles on our roads could be a big step towards achieving net-zero targets. However, there is still a lot of work to be done in order to maximise the scheme’s impact. In order to take advantage of the new tax scheme, businesses will need to resurrect company car schemes or think beyond their standard approach to company cars. Similarly, manufacturers will be under pressure to manage supply and we will need to see an improvement in the UK’s charging infrastructure.”

BVRLA Chief Executive Gerry Keaney: “Today’s Budget shows that the Government is listening and is ready to support those that are ambitious enough to embrace its decarbonisation targets.”

“Tackling road transport emissions and improving air quality is top of the agenda for government, industry and society.

“The Plug in Car Grant and VED measures outlined today will play a massive role in making EVs more affordable for thousands upon thousands of businesses and drivers across the UK.

“Having a roadmap for the future of Company Car Tax up to 2025 removes the uncertainty that we know stifles business decisions.”

“With an average fleet replacement cycle of 1-3 years, the vehicle rental and leasing industry is ideally placed to drive rapid EV-transition in the UK and we will use these fiscal incentives to continue to lead the way in driving the shift towards cleaner road transport.”

Zipcar’s General Manager, James Taylor comments: “Today’s announcement that the grant on all electric cars will be extended until 2022-23 is a crucial initiative to encourage Britons to live sustainably, advancing the UK as a country lowering carbon emissions.

The growth demonstrated in the electric market reveals a consumer demand for sustainable urban travel, but to make sure this is widespread, EVs must be affordable and accessible for all.

The £500m pledge against EV charging hubs will support the key role that car-sharing companies play in making electric vehicle use the norm. The commitment to providing more charging hubs and the grant extension will help allow us at Zipcar UK to achieve our long-stated vision to have a fully electric fleet in the UK by 2025, providing members with convenient, environmentally friendly transport.”

Matthew Walters, Head of Consultancy at LeasePlan UK, said:  “In the run-up to this Budget, the headlines have been dominated by coronavirus, and they will continue to be dominated by coronavirus in the weeks and months to come. This, along with the uncertainty caused by the ongoing Brexit negotiations, is the context through which today’s economic forecasts must be considered. It’s possible that today’s rather anaemic growth numbers will have to be downgraded again in future.

“However, the fleet industry is well-placed to overcome these economic challenges, just as we have overcome similar challenges in the past. Not only did we as an industry account for over half of all new car sales in 2019, but we are also leading the adoption of cleaner motoring technologies.”

On infrastructure spending

“Rishi Sunak has followed Theresa May’s Chancellor, Philip Hammond, by spending £billions on improving road networks. With the UK’s road infrastructure ranked just 36th in the world, well behind comparable economies, it’s clear that improvement is needed. This extra spending will help businesses and individuals who are fed up with the damage and delays caused by substandard highways.”  

On vehicle taxes

“At last, after much prevarication from the last government, along with a delay caused by the general election, we finally have confirmation of the rates of Company Car Tax for the next few years. In truth, these rates are not surprising – they were announced last July but weren’t signed into law – yet they are still historic and welcome. For the first time, the cleanest vehicles will pay no CCT at all, and we now know that the rates will be frozen at their 2022-23 levels until 2024-25. This is the clarity we have demanded for years.

“The system of Vehicle Excise Duty has also been changed to encourage cleaner motoring: zero-emission vehicles will be exempted from the ‘expensive car’ supplement.

“It’s less good news that, in a few short weeks’ time, VED will be uprated in line with inflation – but, given that the Chancellor has also frozen Fuel Duty for another year, we cannot complain too loudly. This Budget was kinder than fleet professionals might have expected.”

On other green measures

“LeasePlan welcomes the Budget’s commitment to green motoring in general. The Chancellor has decided to keep the Plug-In Car Grant going until 2022-23, despite speculation that it could end this April, and he has committed to funding the electric charging infrastructure so that ‘drivers are never more than 30 miles from a rapid charging station’.

“This second policy is particularly important. We know that fleets and motorists are keener and keener to go electric, but many remain worried about the availability of chargers. Allaying these fears is crucial for the country to progress along the Road to Zero.”

Mike Hawes, SMMT Chief Executive, said: “Unprecedented situations call for unprecedented measures so today’s emergency funding and wider measures to support businesses and workers in managing the likely effects of coronavirus is very welcome.

“Given the immediate challenges, however, we are pleased to see the Chancellor find room in his Budget to help make zero emission motoring a more viable option for more drivers – essential if we are to begin to meet extremely challenging environmental ambitions. The continuation of a plug-in car grant is an essential step in the right direction and, alongside the removal of the premium car surcharge on VED and reduction in company car tax for these vehicles, as well as a strategic review of national charging infrastructure requirements, should help encourage consumers and support the beginnings of a market transition.

“Of course, much more needs to be done to maximise the opportunities as we transition the UK market and industry to new technologies, and the promised spending review will be a crucial moment for government to set out a long term vision for transport decarbonisation and industry investment in the UK.”

Sepi Arani, Head of Automotive OEM at carwow commented; “This Budget had the potential to set the tone for the decade with support and incentives to help phase out fossil fuels by 2035.  Indeed, Rishi Sunak’s Budget speech made bold statements on intent in terms of investment to build a greener transport infrastructure and reduce the UK’s emissions. However, the published Budget 2020 Policy paper* confirms the Government is still ‘considering’ the long-term future of incentives for zero emission vehicles.

“The good news is that the Plug-in Car Grant has been extended to 2022-2023.  It’s evident that the appetite for Alternative Fuelled Vehicles (AFVs) is increasing – the fact that 7.8% of all carwow configurations are for AFVs and these configurations have grown 92% year-on-year is testament to this.   What’s more, these searches are turning into sales, in fact 4.69% of carwow sales in March are for electric vehicles – the highest EV sales volume recorded by carwow and up 308% year-on-year.  But if we compare these statistics to carwow Germany, where an increase in the EV subsidy scheme lead to EVs accounting for 35% of total car sales last month, Rishi Sunak may want to rethink the UK’s grant scheme altogether.

“Of course, investment in the public charging infrastructure across the UK, meaning EV drivers will never be more than 30 miles from a rapid charger, will go a long way in curbing anxiety over lack of charging points.  But more needs to be done to knock down some significant barriers to entry into the EV market for many.  We urge the government to agree and map out its longer-term intentions at the soonest possible opportunity to promote the wider use of zero emissions vehicles and accelerate the UK’s EV switch.”

Andrew Mee, head of forecast UK at cap hpi said:  “Based on the Chancellor’s speech, this appears to be a good budget for the automotive sector. We welcome the £500m investment in extending the EV charging hub network, and £1bn to be invested in green transport solutions; although it remains to be seen if the planned investment is in addition to what has already been announced. Similarly, the reference to tax reforms in order to encourage the take-up on EVs may just refer to the April BIK and VED changes we already know about; or there could be some new incentives yet to be confirmed in detail. However, even the changes already announced should have a positive effect on increasing the take up of electric vehicles. 

“Petrol and diesel drivers will be relieved to hear that fuel duty has been frozen. If this had been increased it could have been seen as a nail in the coffin for petrol and diesel vehicles.

“Overall it would appear this is a positive budget which looks to invest in cleaner, much more eco-friendly vehicles but also offers some relief to drivers of petrol and diesel vehicles in that they won’t be punished at the pumps in the short term.”

Neil Worth, road safety officer at GEM Motoring Assist: “We are delighted that the Chancellor is willing to pour £2.5 billion into potholes over the next five years. Potholes are a national disgrace, and have been allowed to proliferate all over the country, leaving so many stretches of road in a truly dangerous state.

“Road maintenance programmes have rolled out too slowly. Potholes are a danger to all road users, and they cause damage. Car suspensions are jarred, motorbike and bicycle wheels buckle, riders can be thrown to the ground, while pedestrians risk injury from tripping over. No wonder potholes have become such a scourge.

“We would like to see action taken immediately that will give national highways agencies and local authorities the means to ramp up their programme of pothole repairs.

“We also want to ensure contractors work swiftly and smartly to make good the damage caused by potholes. This means fixing all the potholes in a specified area all at once, not selecting a few then coming back again and again to fix others.

“It is therefore encouraging to see that the UK government is willing to make this significant investment. Let there be no delay in improving the state of our roads.”

ICFM chairman Paul Hollick comments on Budget 2020: “This was dubbed the ‘coronavirus Budget’ by many, but for fleet decision-makers and company car drivers it was a good news Statement that could spur company car demand.

“The Chancellor stamped on speculation that suggested that it would be the Budget that brought to an end the decade-long fuel duty freeze. However, beneath that headline which the national media will focus on it was a Budget that clearly drives fleets and company car drivers further along the ‘green’ road and that essentially means 100% electric vehicles.

“A surprising decision to freeze company car rates for 2023/24 and 2024/25 at already announced, and now confirmed, 2022/23 rates means that fleets and company car drivers can plan for the long-term.

“With company car benefit-in-kind tax rates now known for a full five-year vehicle cycle, which is the norm for some organisations, the Budget could even herald a resurgence of the company car. That’s because many drivers’ decision to opt out of a ‘favourite’ employee perk was driven by tax uncertainty.

“I would have liked the Chancellor to have bowed to leasing company pressure and extended the same 100% capital allowance relief to them as is enjoyed by outright purchase fleets.

“However, overall with the investment in the road network, hundreds of millions of pounds for to support the roll-out of a fast-charging network for electric vehicles and confirmation that the Plug-In Car and Van Grants would be retained at least until to 2022/23 it was a welcome Budget Statement.

“Nevertheless, I would have liked the Chancellor to have confirmed retention of the Plug-In Car and Van Grants perhaps for a year or two beyond the date announced, but fundamentally it is a ‘green’ Budget and clearly signposts the way forward for the fleet industry.”

Chris Russell, CEO and co-founder of Tonik Energy: “Clarity on the benefit-in-kind (BiK) rates marks a new era of driving. After months of uncertainty, the Chancellor has given fleet managers and company car users confidence to accelerate investment into electric vehicles and green strategies. With first year allowances now only available for businesses buying ZEVs, and zero-emission company van drivers set to benefit from a nil rate of tax from April 2021, the government has initiated a big change which will undoubtedly have a rapid impact on business fleets.

“It is encouraging to hear that ZEVs will be exempt from the Vehicle Exercise Duty expensive car supplement, which up until now will have deterred consumers from committing to greener vehicles which often retail above £40,000. The investment into the Plug-in Car Grant, Plug-in Van Grant, and Plug-In Motorcycle Grant is also a clear sign that the government is committed to the UK’s green future.

“The combination of these initiatives has resulted in a Budget that has brought us closer to the UK’s Net Zero target. It is now time for the government to turn its attention to fast and convenient access to power which will be paramount for ZEV drivers. Whilst the Chancellor’s announcement that £500m will be invested to support the rollout of rapid charging hubs is, of course, a step in the right direction, we are yet to see the government acknowledge that renewable energies are the linchpin to this change.”

Dan Martin, CEO of independent EV charging company Elmtronics: “As the UK government has a target of banning petrol and diesel vehicle sales by as early as 2032, this directive is pushing both the public and private sector to work together and businesses concentrated in cities have no option but to look at mass electrification of their fleets. The Budget has shown that the government supports electric vehicle (EV) uptake and the first step of this is to continue to support the growth of EV charging infrastructure as proposed, so vehicles have a place to charge and anxiety range is no longer a key barrier.

The investment in charging hubs and tax cuts for clean transport will undoubtedly mean that EVs will be more accepted and used in the UK. The development of charging infrastructure coupled with more affordable EVs, in-line with traditional drivetrains, will work to encourage mass adoption of EVs.

Electric vehicles are safe, clean and quiet which will undoubtedly pave the way toward a brighter future, particularly in our urban areas.”