Fleet News

Budget 2003: industry reaction

BRITAIN'S leading industry figures share their views on how the Budget will affect fleets over the next few years.

Matthew Carrington,
Chief executive, Retail Motor Industry Federation
'The retail motor industry has been neither helped nor hindered by today's Budget. Overall, the Chancellor's measures leave the sector in the same position as last year. Although a number of measures were announced with the intention of helping small and medium sized businesses, including new investment allowances and reduced regulation for vehicle repairers, the sector as a whole received little in the way of encouraging news.
'Some effort has been made in this budget to reduce the problems for small to medium enterprises in managing Government imposed 'red tape' but much remains to be done in this area. Government must appreciate that it's not just providing support to start up a small business that's required, it's protecting them afterwards against tough or even unfair competition from large corporations.'

Ray Holloway
Director, RMI petrol retailers division
'During the next few weeks fuel prices in the UK should fall, therefore a modest tax increase in the autumn should be offset for motorists and petrol retailers by the savings against current prices. Inflation has not been added in either of the Chancellor's past two Budgets. Although duty on fuel will increase in line with inflation, as was expected, this could have been higher, so it is good news for consumers.
'The Chancellor of the Exchequer has taken a cautious approach to application of the duty increase by deferring until October 1, when it will surely be applied, perhaps because the Government is still sensitive to the possible results of having fuel at 80 pence per litre and tax at 80%.'

Stewart Whyte
Director, Association of Car Fleet Operators
'The Treasury and Inland Revenue understand that the future well-being of the company car is essential if long-term environmental objectives are to be realised. In addition the tax changes also underline a new-found recognition by Government that running a fleet is a long-term strategic business.
Gordon Brown has heeded our pre-Budget call for the 'minimum possible reduction' in the CO2 threshold level, from its 145 g/km of CO2 for 2004/05 to 140g/km for 2005/6. Fleets and company car drivers can plan their strategy at least until April 5, 2006. That indicates the Chancellor and his advisers at the Treasury and Inland Revenue understand that judgements on fleet policies and company car acquisitions must be made against a long-term taxation framework.
'However, following the introduction of the new fuel scale charge system, the Chancellor of the Exchequer gave fleet decision-makers and company car drivers no clue as to his future plans for the tax, which is disappointing. A further major disappointment was the failure to deliver a long-term strategy that would incentivise fleets to switch to alternative fuels.'

Christopher Macgowan
Chief executive, Society of Motor Manufacturers and Traders
'The Budget raised concerns within the motor industry that uncertainty over future fuel and vehicle taxation could undermine the stability of the sector. The tightening of company car tax bands in 2005/6 has been announced before the full effects of the new system have been evaluated. Government plans for future changes must be subject to thorough consultation with industry. Failure to do so could deter business and fleet registrations, reducing domestic demand in the new car market.
'The new lower band for VED is a positive incentive for 'cleaner' vehicles. The industry welcomes the introduction of fuel duty cuts for zero sulphur fuel but is disappointed that this will not come into effect until September 2004. Government must commit to a stable regime for fuel duties over a longer period.'

Duncan Wilkes
Managing director, RAC Business Solutions
'The Budget was not such good news for UK fleets and company car drivers. The Government announced last year that it was going to introduce emissions-based tax thresholds. Of course we welcome moves by the Government to clean up the environment but this, together with the increase in national insurance, will have a severe impact on some fleets.' Gordon Calder-Jones
Head of Client Services, Interleasing
'The measures are disappointing for both company car drivers and fleet managers alike, as they do not help either to plan their car provision more than a year ahead. The Government is understandably playing a cautious game when it comes to increasing carbon dioxide-based taxes, but its announcement to lower the 15% band from 145g/km in 2004/5 by 5 g for the following year is not very helpful to fleet managers or drivers. Although it is good news that the rate is reduced by 5g/km rather than the expected 10g/km, we would have liked to see him announce more than one year at a time.
'Fleets faced with hefty investment decisions could be significantly hit by unexpected changes to company car taxation over the next few years. Businesses need a longer-term view of company car taxation to allow them to make decisions now about the company car as a benefit and how they might finance it in the future. The way the carbon taxes are being introduced is like asking a marksman to shoot at a moving target in the dark.'

Nigel Stead
Managing director, Lloyds TSB autolease
'There are positive signs the Government is continuing its commitment to alternative fuels. A duty freeze on LPG, combined with beneficial rates for zero sulphur fuels and bioethanol in the longer term, will give some comfort to those considering greener fleet options. Regarding VED, the introduction of the new AAA band further encourages clean fleet operators to source environmentally-friendly vehicles.'

Philip Sellwood
Chief executive, Energy Saving Trust
'This is a disappointing Budget for household energy efficiency, but on transport things are much more positive. The introduction of a new low VED band, enhancing the company car taxation focus on carbon emissions, and the promise of fiscal incentives for bioethanol are all steps in the right direction. Slowly transport policy is reflecting the carbon reduction imperative and that is real progress. We need to see similar progress with regards to household energy use.'

David Wallace
Director, AA Business Services
'We welcome the temporary freeze in fuel duty but are disappointed that the Chancellor of the Exchequer has raised road tax. We hope for a continued fuel duty freeze past the October deadline, as we still have the highest fuel taxes in Europe.'

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