Budget 2021 response

Thursday, March 4, 2021 - 10:07
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From Freeports to Fuel Duty and insurance, there was a lot in the Budget that had impact on fleets, logistics and transport. Below are some comments and assessments of its impact from industry leaders.

Matthew Walters, Head of Consultancy and Customer Data Services at LeasePlan UK, said: 

On the economic forecasts: 

“There’s no escaping it: 2020 was a historically challenging year for the British economy, as well as for the businesses and individuals operating within it. As the Budget’s forecasts suggest, the recovery is going to be a demanding process.

“Of course, the fleet industry is ready to play its part in this effort, however long it takes. We won’t just supply the vehicles that Britain needs to get moving, but cleaner vehicles for a new green economy. We must seize this opportunity to build back better.”

On the Super Deduction 

“One of the biggest rabbits that Rishi Sunak pulled from his hat was the Super Deduction: tax relief amounting to 130% of the cost of any investments in new equipment. This is likely to give a significant boost to business activity.

“However, from the perspective of fleets and motorists, the Super Deduction is more of a Super Missed Opportunity. The Red Book makes it clear that this only applies to plant and machinery. I would urge the Chancellor to go further and extend this to both the cost of changepoint installations and, more importantly, to the costs of grid and infrastructure upgrades where there is currently no relief.

“Let’s see whether this is actually extended in the upcoming Finance Bill.”

On Fuel Duty and rebalancing the public finances: 

“The Chancellor has spent £billions to keep the economy going through the pandemic. He has spent £billions more in this Budget. He has had to. But the country cannot keep borrowing to get that money – at some point, Mr Sunak will have to start paying down the debt.

“There had be speculation that he would kickstart this process today by adding a full 5p to Fuel Duty. Thankfully, this didn’t happen. The Fuel Duty freeze that has been in place for a decade now has been extended for another year.

“But we ought to prepare for tougher measures in future. And the Chancellor ought to consider whether motorists really are the best people to face those tougher measures. Although we understand the importance of rebalancing the public finances, there’s no point stunting the economic recovery before it’s even really begun.”

On green motoring and vehicle taxes: 

“Last year’s Budget gave us something valuable: the rates of Company Car Tax up until 2024-25. But there’s still more that the Chancellor needs to confirm – and didn’t today.

“Reviews had previously been established to look into how road taxes could better encourage the uptake of lower-emission vans and cars, but the final policies haven’t been announced yet. With the 2030 ban on new petrol and diesel sales fast approaching, we need these sorts of policies in place as soon as possible.”

Dan Hutson, head of motor insurance, comparethemarket.com said: “Many motorists will be relieved that the Chancellor has made a sensible choice by keeping the ten-year freeze in fuel duty. Ensuring fuel remains affordable is essential to maintaining economic growth. However, the Chancellor could have gone further to help motorists and it is disappointing he did not take action to reduce the cost burden of insurance premium tax (IPT), which could have helped to accelerate the UK’s recovery. At a time when so many are struggling financially, the current rate of IPT significantly impacts the cost of driving and could price some people out of car ownership entirely. If you live in a city, you may be able to get by without a car, but for those in more rural areas, cars are essential to get to work, take children to school, or see friends and family.

“While the Government claims IPT targets insurers, the reality is that it punishes drivers, especially young people who shoulder the largest burden when it comes to this tax increase but can afford it the least. IPT is calculated based on the annual cost of insurance which means that those who have higher premiums pay higher tax. This unfairly penalises young people who pay an average of £135 in IPT every year compared to £67 for the rest of the UK.  When household finances are stretched, the high cost of running a car, particularly for younger people, is making driving a luxury for many who see it as a necessity once lockdown lifts.”

Richard Hipkiss, managing director of Fleet Operations, said: “At a time when the fleet industry is feeling the financial squeeze, a freeze to fuel duty will undoubtedly be welcomed.

“Though we are set firmly on the road to a fossil-fuel free future, the pandemic has put some road blocks in place.  Sustainability objectives, though critical, may have had to take a backseat temporarily as companies set their sights on surviving rather than thriving in the current climate.

“With alternative fuels becoming more mainstream, aided by improved EV accessibility and affordability, fleet operators should expect to see a hike in fuel duty in the coming years, as the government reinvigorates its green pursuit – but for now, efforts can be concentrated on recovery.

“The 2023 corporation tax increase, which is part of plans to boost finances, will serve to make capital allowances and tax relief on low and zero emission vehicles more favourable, which could further encourage EV take up for fleet managers who make policy decisions on post-tax TCO (Total Cost of Ownership).”

Chris Burghardt, MD – Europe at ChargePoint,: “ChargePoint welcomes the UK government’s investment of £12bn to finance the UK’s green revolution and commitment to green growth, focusing on both public and private green infrastructure. Today’s Budget includes some welcome initiatives to support businesses like ChargePoint who are rapidly scaling and investing in the UK’s green transition. We hope they will encourage investment appetite in the UK’s burgeoning e-mobility sector. In particular we look forward to the newly-created UK Infrastructure Bank funding projects which will help accelerate the UK’s transition to electric vehicles. As the world’s first publicly listed EV charging company with cross continental reach, we look forward to continuing to contribute to the e-mobility transition with the UK’s international partners across the world.”

Jon Lawes, managing director, Hitachi Capital Vehicle Solutions: “This was an optimistic budget for those of us hoping for significant investment in infrastructure to speed up the adoption of EVs and deliver a greener economy. The announcement of the UK’s first Infrastructure bank, based in Leeds, signals the Government’s commitment to reach “net zero carbon” by 2050 and bring about the green revolution we need. In the EV sector alone, we’ve seen rapid development in technology over the last decade and we are now at the tipping point where the infrastructure needs to match demand. If we are to accelerate adoption we need this new body to prioritise support for essential electric infrastructure.”

Adam Bond, CEO of AFC Energy commented:

On fuel duty freeze:

“It’s unfortunate that an opportunity was missed to catalyse further investment into alternative fuel sources by the Chancellor implementing a fuel duty freeze. We believe he could have gone further in considering fuel duty changes; this includes penalising the use of red diesel in industry, which the Chancellor has previously admitted distorts competition and acts as a block on green alternatives.”

On Freeports:

“Freeports have the opportunity to become significant commercial centres for the UK, boosting inward investment, creating jobs and driving the country’s economic recovery. As part of the Government’s drive to “build back better”, we believe it is crucial that these freeports are developed in a sustainable way and capitalise on the opportunity to reduce GHG emissions by adopting zero-carbon technologies –  particularly in port-side operations and the maritime sector as demanded by the UK’s Maritime 2050 Strategy.”

Sepi Arani, Commercial Lead at www.carwow.co.uk, commented: “The announcement from the Chancellor of the Exchequer today that fuel duty will once again not increase marks the 10th year that fuel duty remains frozen. While fuel has decreased in necessity over the past 12 months, with lockdown set to lift over the coming months – does this indicate that the government sees increasing this tax a far less lucrative option as we witness the rise of EV’s? Either way its positive to see that British motorists are not, at least for now, bearing the weight of budget challenges.”

Fiona Massey, fleet consultant at Zenith, said: “The Chancellor brought some welcome good news with the upgrading of the forecast for GDP growth and jobs. A stronger and earlier economic bounce back is positive for all sectors and supports fleet demand.

“The Government reiterated its commitment to decarbonisation and the Road to Zero, and the industry was given much-needed stability with no significant changes to company car taxation.”

David Brennan, CEO of Nexus Vehicle Rental. “After more than a year of uncertainty surrounding Brexit and Covid-19, we can now see some light at the end of the tunnel with the success of the vaccine rollout and the government’s ‘road map’ out of lockdown, however, we can now look ahead with optimism. The chancellor’s assertion that for businesses, certainty matters., cannot be understated.

“After a turbulent year, today’s Budget announcement highlights the need for businesses to remain flexible, agile, and adaptable, and we welcome the much-anticipated extension of the furlough scheme to support individuals and businesses as the country gets back on its feet.

“Businesses have been reliant on the furlough scheme, business rates relief and deferred VAT payments and despite lockdown restrictions easing in the coming months, continued financial support from the government remains vital to the survival of many firms in the vehicle rental sector.

“It was inevitable that the country would have to repay debts racked up throughout the pandemic, with a rise in corporation tax by even just 1% would contributing an extra £3bn to this, helping the UK push its way into recovery, so we should be reassured that the increase from 19% to 25% is in the best interests of the country. Given this will not come into effect until 2023 and operate on a sliding scale for firms, it’s encouraging that the chancellor recognises now is not the time to raise taxes for business, many of whom are struggling with restrictions and need time to get back on their feet.

“It’s promising to see the Chancellor’s commitment to helping the regions level up and grow post-pandemic and post-Brexit, particularly the North, with the location of Treasury North revealed as Darlington, and that the Humber and Teesside are amongst the first wave of freeport locations. These locations will be key to boosting trade, jobs, investment, and confidence across the UK.

“A renewed commitment to green growth is reassuring, and given our headquarters in Leeds, it’s especially gratifying to hear that the first ever UK infrastructure bank will be located in in the city and focused on investing in the green industrial revolution from the Spring.

“The continued freeze on fuel duty for the eleventh consecutive year should prove a relief to many as well. The government’s continued support of the transport and logistics sector, which is critical to the UK economy, is extremely welcome. However, whilst the government is also clearly sign-posting fleets towards a greener future in light of the looming petrol and diesel ban in 2030, it must further support the production of EVs to increase affordability, as well as put the appropriate infrastructure in place, to enable more businesses to see how this transition could be a realistic solution.

“It remains to be seen how the opportunities presented by freeports and tax freezes will translate into the fleet sector but the level of additional investment and tax breaks the government has committed to today is promising. Following today’s announcement, we need to now see a clear timing plan for the projects that the government intends to refocus on to boost the economy to reassure businesses and enable them to drive forward with confidence.

Andy Bradley, Director Delta-EE, the new energy consultancy: “In the last budget before COP26, we hoped for evidence the green recovery rhetoric would be delivered on. Yet, despite hints of green policy such as the new investment bank, we lack the ambition needed to reach net zero. We know cutting VAT is politically possible for hospitality, so why not for green home improvements – especially when the Green Homes Grant is as good as scrapped? We also know these moves would be popular. Some of our research revealed 46% of respondents are interested in low carbon heating, for example. Today’s budget could have been used to support households to make greener choices, and support jobs in the sector. Transport emissions are also falling too slowly – just a 1% drop last year on 2011 levels, as SUV sales are greater than EVs. No budget announcement will stop the shift to EVs, but we would have welcomed extra ambition from the chancellor by unfreezing fuel duty.”

Ashley Barnett, head of fleet consultancy at Lex Autolease, commented: “An alternatively-fuelled future simply can’t happen overnight. The affordability of EVs is a key barrier towards mass adoption and for some people, an ICE vehicle remains their only option. Against the backdrop of the pandemic, many people are still using cars as a safer mode of transport and any rises would feel counterproductive at this moment in time.  As momentum continues to shift away from petrol and diesel, a future rise in the 10-year fuel duty freeze feels inevitable and will help fund investment in greener alternatives.”


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