Fleet News

Brexit policies try to mitigate tariff threat for cars and vans

The Conservatives have reiterated their threat to walk away from any Brexit deal which fails to deliver for the UK. Outlining plans for leaving the EU in its manifesto, the party insisted it was committed to getting the best deal for Britain.

A bad deal could see manufacturers having to pay tariffs if the UK fails to gain access to the free market. Any additional costs could then be passed on to fleet customers through increased rentals, fewer discounts and heftier P11D prices.

The Conservatives want to maintain the common travel area and keep as “frictionless a border as possible” for people, goods and services between Northern Ireland and the Republic of Ireland. Workers’ rights conferred on British citizens from its membership of the EU will remain and it intends to pursue free trade with European markets, and secure new trade agreements with other countries.

But, because the UK is leaving the EU, the Tories say it will no longer be a member of the single market or customs union, so will instead strike a new free trade and customs agreement.

Meanwhile, Labour argues that leaving the EU with ‘no deal’ would be the worst possible deal for Britain. It has vowed to scrap the Conservatives’ Brexit White Paper if it forms the next Government and replace it with fresh negotiating priorities that have a strong emphasis on retaining the benefits of the single market and the customs union.

However, while it has ruled out holding another referendum, the Liberal Democrats say that when the terms of the UK’s future relationship with the EU have been negotiated, it will put that deal to another vote, with the alternative option of staying in the EU on the ballot paper. 

“We continue to believe there is no deal as good for the UK outside the EU as the one it already has as a member,” says its manifesto.

More than half of all the cars and 90% of all the commercial vehicles built in the UK last year, were bought by customers in Europe, while the EU represents more than 80% of the UK’s motor vehicle import volume, worth €42 billion (£36bn). Seven out of every 10 new cars sold in the UK come from EU plants.

The European Automobile Manufacturer’s Association (ACEA) told Fleet News that a single vehicle part may be composed of more than 30 components, and undergo more than 100 process steps to become a finished product. 

It may pass through 15 countries, and cross borders multiple times in its material journey, with a single vehicle consisting of about 30,000 parts.

Vehicle manufacturers currently operate some 300 assembly and production plants in Europe. They often manufacture engines or transmissions in one country and assemble the final vehicle in another. 

The ACEA says the single market provides for a high level of economic and regulatory integration in this respect, which is reflected in how the automotive industry has set up its business operations in terms of supply chains, production sites and distribution networks.

ACEA secretary general Erik Jonnaert explained: “Today, the automotive industries of the European Union and the United Kingdom are closely integrated; from the economic, regulatory and technical points of view. Any changes to this level of integration will most certainly have an adverse impact on automobile manufacturers with operations in the EU or the UK, as well as on the European economy in general.”

This could result in tariffs of up 10% for cars, up to 22% for vans, and 3%-4% on average for parts and components.

Sigrid de Vries, secretary general at the European Association of Automotive Suppliers (CLEPA), said: “Vehicle manufacturers and component suppliers are entangled in a highly integrated manufacturing network spanning Europe. 

“Tariff- and burden-free market access, as well as a stable and predictable regulatory framework, are crucial instruments to sustain the supplier industry’s technology leadership and secure investments and jobs.”

Self-employed drivers and the gig economy

Workers plying their trade in the so-called ‘gig’ economy (short-term or freelance contracts) are typically classed as self-employed and therefore have fewer pension entitlements, reduced access to benefits and no qualification for sick or holiday pay. 

Yet the nature of their work differs from the traditional self-employed person who might be a sole trader, a freelancer or running their own business.

The Tories say they will:

■ Make sure people working in the gig economy are properly protected. Last October, the Government commissioned Matthew Taylor, the chief executive of the Royal Society of Arts, to review the changing labour market. 

It will await his final report, but a new Conservative government will act to ensure that the interests of employees on traditional contracts, the self-employed and those people working in the gig economy are all properly protected.

The Labour Party says it will:

■ Shift the burden of proof, so that the law assumes a worker is an employee unless the employer can prove otherwise. 

■ Give employment agencies and end-users joint responsibility for ensuring the rights of agency workers are enforced.

■ Set up a dedicated commission to modernise the law around employment status. New statutory definitions would reduce the need for litigation and improve compliance. The commission will be led by legal and academic experts with representation from industry and trade unions.

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