PricewaterhouseCoopers said it is surprised not to see any definitive announcements on company car policy in today’s Pre-Budget Report relating to capital allowances and CO2 emissions.

There are, however, a number of changes that were previously announced which take effect from April 6, 2008:
1. The starting point for the new 15% band for CO2 based taxation will be reduced to 135g/km;

2. The introduction of a new 10% band for cars with a CO2 of less than 120g/km.

Technology improvements by the manufacturers means that there are a number of cars available below the 120 g/km level, although many of these will still be subject to the 3% diesel supplement.

This means that a £10,000 company car can be offered to an employee for only £200 in tax a year.

“Many companies are starting to realise that offering company cars to all employees (not just those who need them for work), is perceived by employees as a valuable benefit, said Gary Hull, tax director, PricewaterhouseCoopers LLP.

“These cars will also be maintained, repaired and insured through the arrangements, which is attractive to both employer and employee, especially where the car is to be used for business purposes.”

Christopher Macgowan, chief executive of the Society of Motor Manufacturers And Traders, said: “The motor industry has taken giant strides over the past 20 years to clean up its act in terms of the environment.

”It is now getting fed up with ever more green taxes being imposed on it, and its customers, while other industries get off relatively lightly.

“I will not tolerate politicians who point the finger at the motor industry saying that we are the problem and should be legislated to hell and back.

“The industry recognises that it is part of the environmental problem and has been addressing it. There are other industries with a much worse record.

“One of the unintended consequences of over legislation could be the loss of a major carmaker and nobody wants to see that. What we need is a carefully managed environmental strategy.”

"From our intitial impressions, the key point of first part of the King Review is that it sets out what could easily be adopted by the Government as a single, clear objective on road transport CO2 - that per kilometre carbon emissions could be reduced by 50 per cent by 2030,” Andy Leech, business leader at cfc solutions, said.

Fleets would obviously and properly be expected to play a part in this.

For car fleets, there is little beyond this that could be described as informative. Other than noting corporate fleets are likely to be inclined towards a level of social responsibility, and that we are in a good position to adopt new technologies, the Review provides no guidance on which future technologies are likely to be suitable for fleets and how we may be encouraged to adopt them.

"For van fleets, the picture is slightly different. The Review does note, as have many commentators, the current lack of a formal CO2 certification process for vans and this is something that could, and is perhaps likely, to be put in place relatively quickly.

"It also points out clear operational policies that could be adopted by van fleets - that better driving could be a key factor, for example. This could lead to further Government action soon, such as an extension to the SAFED initiative.

"Really, the first part of the Review tells us little that we didn't already know. What we are waiting for is part two and the Government's response to it."

The RAC Foundation welcomed the commitment to an increase in transport spending but stressed that a greater proportion must be spent on roads as 93% of passenger journeys and the majority of freight are carried by road.

The total estimate to be spent on transport in 2007-8 is £20bn and this is forecast to increase to £23.7bn by 2010-11. However, the motorist is already paying double this amount in motoring taxes each year (£45bn in 2006).

Edmund King, executive director of the RAC Foundation, said: "Whilst any increase in transport spending is welcome, we need to see a greater proportion spent on roads. The vast majority of trips are by road and the motorist already pays more than twice as much in motoring taxes each year than the total transport budget. The motorist will view the recent fuel duty increase and proposals for yet more increases over the next two years as money for nothing unless the road infrastructure is improved."

‘The Chancellor has missed an opportunity by failing to twin his Vehicle Excise Duty (VED) evasion clampdown, with a matching attack on car insurance dodging.’ said Alec Murray, chairman of the Retail Motor Industry Federation (RMIF).

There are 27 million drivers on Britain’s roads, and it is estimated that one in ten are currently uninsured.

“The insurance premiums paid by law-abiding motorists are kept high in order to pay for the 2.7 million who shirk their responsibilities as road users. VED and car insurance evasion go hand in hand, so the Chancellor had an opportunity to allow motorists to have more money in their pocket at the end of the year, and reduce the misery that results from crashes involving uninsured vehicles.

In the Pre-Budget Report, Mr Darling also revealed strategies intended to help businesses. He said that the main rate of corporation tax would be reduced from 30% to 28%. He also plans to simplify the tax system relating to self-employed staff.

Murray said: “Through these plans, the Chancellor seems to be helping businesses by reducing costs and red tape. Let’s hope he follows through.”

Nick Sutton, chairman of Provecta Car Plan, said “Clearly the Government recognises organisations need a number of ways to keep employees mobile, including ECO schemes and privately owned cars.

“By endorsing ECO as a cost effective business tool, the government is allowing companies to choose the best business travel option for them to remain competitive.

“The Chancellor also gave an update on the ongoing AMAPs (Approved Mileage Allowance Payments) review to change the system to one that fairly compensates workers yet encourages greener motoring attitudes and behaviour.

“Whether employees are using company cars, ECO cars or their own car for work, the tax system must now take into account the environmental impact of every journey.

“When Ministers look at the options open to them regarding changes to the AMAPs system, aligning them to CO2 emissions would actively encourage a large proportion of the population to opt for newer, cleaner and greener cars.”

David Brennan, LeasePan managing director, said: “The Chancellor announced that the figure on which the benefit for free private fuel is calculated will rise from £14,400 to £16,900 from April 2008.

“Whilst this is in line with the change in the retail price index of 2003, when this system was introduced, it will still come as a significant tax burden to many drivers.

“The Chancellor’s stated objective for this is to ‘enhance the environmental incentives to drive fewer miles.’ This change will force many drivers to review the value of free fuel. For those who choose to relinquish their fuel benefit, greater consideration is likely to be given to the miles they drive.

“Generally speaking this was a fairly neutral Pre-Budget speech which continues to underpin the Government’s commitment to green policies. I am, however, pleased but not surprised the Government has seen fit not to consider ECO schemes subject to benefit-in-kind.

“Through the King Report, the Government is also looking at ways to improve the awareness and availability of low carbon-cars which can only serve to drive down CO2 emissions further.

“In the responses to the consultation on modernising tax relief for business expenditure on cars, the government was called upon to apply environmental policies to private cars as well. It’s certainly something to look out for in the future, but as we stand, the company car remains the greenest on the road – the Pre-Budget report has once again cemented that position.”

ABD chairman Brian Gregory said: “Alistair Darling's announcement of a doubling of the transport budget will be welcome news to British drivers who, instead of around one-sixth of their £46 billion taxes per year going on transport, will see closer to one-third being reinvested.

“Darling also announced widening of motorways, although it won't be until 2010 by which time the promised yearly increases in fuel duty will be in effect.

“However, the ABD urges caution that this extra money must not be wasted.

Too often we have seen what limited transport money there has been frittered away on consultations and restrictive schemes such as traffic calming, etc.

“The Government's controversial proposed road pricing scheme could easily soak up a huge proportion of the money alone.

Britain's drivers must put pressure on the Government to ensure that towns and villages crying out for bypasses get them built and that the motorway network is completed.

"Transport and in particular our crumbling road network have for too long been treated as the 'Cinderella' of public services, yet a good road network is crucial to our economy and congestion affects almost everybody, directly or indirectly, every day of their lives.”