Fleet News

Industry gives Budget plans a mixed reception

REACTION to Chancellor of the Exchequer Gordon Brown's pre-Budget Report is mixed.

Many are upbeat about his proposals and the British Vehicle Rental and Leasing Association (BVRLA) said it was pleased the Government had signalled that it will not rush into a hasty decision on the future of company car tax.

Brown presented an optimistic assessment of the British economy and told MPs that 'economic growth in this country is now strengthening'.

He also conceded that Government borrowing will be greater than he previously forecast – it is now expected to be £37 billion this year not the £29 billion he predicted in April.

Here are some of the key industry responses:

John Lewis
Director-general, British Vehicle Rental and Leasing Association (BVRLA)
'We're pleased that the Chancellor seems to have been listening to the fleet industry's requirements. We have been lobbying for long-term planning in the Government's approach to alternative fuels. It's essential that industry knows in advance what duty differentials will be in place, including any proposed alterations, so that companies can properly plan their move to lower polluting fuels wherever possible. They can only do this in an atmosphere of certainty. This they now have. My only reservation is that we have yet to see the overall rates of duty being planned.
'The Government has also been listening to us on its corporation tax reform. This is a complex area and we had been concerned that the Government might reach hasty decisions and introduce its reforms before they had been properly worked through. 'We have been in deep discussion with Government over the last few months on this and we have advised that it is essential that any changes are to the benefit of British industry and not merely an additional regulatory burden.
'It's good news too, that the Government will not rush into hasty decisions on company car tax until it has had time to properly assess the effects of the present tax system.
'We believe the present tax system has radically affected driver behaviour to the benefit of the environment. It's critical that we know what the tax basis rates will be set at for at least three years into the future so companies and drivers can plan which vehicles to take on.'

Digby Jones
Director-general, Confederation of British Industry (CBI)
'This was a positive pre-Budget report for business, given there was little room for manoeuvre, but we remain concerned about the outlook for the public finances. Firms will be relieved to see no nasty shocks in the shape of further increases in the business tax burden.
'The Government has made a number of helpful announcements. The intention to extend discounts on climate change levy is particularly welcome. This is something the CBI has been campaigning for to help our beleaguered manufacturing industry.'

David Frost
Director-general, British Chambers of Commerce (BCC)
'We are very pleased by the Chancellor's commitment to enterprise. This is the key to the well-being of the UK and so it is vital that it is nurtured, strengthened and supported.
'We are concerned about the level of borrowing revealed in the pre-Budget Report. The Chancellor needs to take tough decisions to rein in public expenditure. The BCC repeats its recent position that there must be no additional taxes on business.
'We are also concerned that the Government's forecasts for manufacturing expansion over the next two years may prove too optimistic. Further taxes would increase the pressure on this already beleaguered sector.'

Neil Hamper
Financial affairs chairman, Federation of Small Businesses
'A number of these measures are already known to us and we would urge the Chancellor to introduce symmetry into the debate by coupling economic stability with regulatory stability as small firms are hardest hit by the cumulative impact of regulations.'

George Cox
Director-general, Institute of Directors
'We welcome the moves to stimulate enterprise and the growth of small businesses. We appreciate that at last there is a growing reaction that over-regulation is stifling business and we are pleased to see that the Government is beginning to respond to our members' strong concerns about the burden of red tape.
'However, the big issue is the Chancellor's economic forecasts. If his growth projections are not met he could be forced into imposing higher taxes which would be unwelcome and would have a serious negative effect on the economy.'

Simon Dixon
Chief executive, Dixon Motors
'The Chancellor has given us reason to hope that the motorist will not receive any bad news next spring. It remains to be seen whether this rings true. However the Government should be mindful that in an industry that has been threatened in recent years, further tax hikes could cripple motorists, retailers and manufacturers.'

Peter Robinson
Chief economist, Institute of Public Policy Research (IPPR)
'The fact that the Treasury now forecasts the budget deficit for this year at 3.4% of GDP rather than 2.5% will have economists excited. There will be much analysis of whether the Chancellor's fiscal arithmetic for future years adds up and whether he is likely to meet his 'golden rule' for public spending and borrowing without further increases in taxation.
'Most of this will go right over the heads of the bulk of the population. It also slightly misses the point. Even if the Chancellor's arithmetic turns out to be correct, the 2004 Spending Review will see sharp battles over how to divide up what's left of the spending cake after the resources pre-committed to the NHS are taken into account.'

Matthew Carrington
Chief executive, Retail Motor Industry Federation (RMI)
'The retail motor sector includes a vast number of small businesses who provide a fantastic service for the consumer under what have been rather stringent Government regulations. By cutting regulations, costs could be reduced. It would also allow businesses to get on with serving their customers.
'Raising the limit at which companies need to be audited will be great news for small businesses. By increasing the level, many thousands of businesses in the retail motor sector would be exempted from the requirement of being audited. This could also greatly reduce accounting bills for smaller companies.'

Oliver Letwin
Shadow Chancellor
'Gordon Brown built his reputation on his claims to be prudent. He told us he would be borrowing £37 billion this year and more than £120 billion over four years. Now, experts are suggesting he has moved the goalposts when it comes to measuring his performance against the golden rule.
'Despite these increases in borrowing and despite all of Gordon Brown's extra taxes, the Government's failure to reform the public services means it still hasn't delivered anything like the improvements that everyone wants to see.'

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