Spring Statement keeps fleets guessing

Spring Statement keeps fleets guessing

Posted by

Fiona Irving

March 2019

In his second Spring Statement – really only an appetiser before the main Budget event in November and undoubtedly a minor distraction from Brexit – the Chancellor of the Exchequer, Philip Hammond, offered precious little cheer – or information – for the fleet market to digest.

The big issue going into the Statement was the outcome of the Government review into the WLTP emissions regime, and its impact on Benefit-in-Kind and Vehicle Excise Duty rates.

However, there was very little in terms of clarity from the Chancellor on WLTP which has proved so contentious across the fleet industry, and which has been the subject of an HMRC review since being announced at last October’s Budget Statement.

Instead, in papers accompanying the Spring Statement, the Government said that it will issue its response to the review into the impact of the WLTP on VED and company car tax “in the coming months”.

Vehicle manufacturers are currently able to quote WLTP emissions values correlated to the previous New European Driving Cycle (NEDC) testing system, before they must switch solely to WLTP values from April next year.

However, many experts have identified a general increase in CO2 emissions when comparing the old regime to the new, with the only likely outcome a corresponding increase in company car tax bills.

The Government has previously indicated that the new WLTP CO2 values will be adopted for tax purposes from April 2020, when a hike in BIK bills can be anticipated.

UK’s economy ‘robust’

In a short speech to the House of Commons, the Chancellor gave details of the health of the UK’s economy which he said was robust. But he called for a ‘no-deal’ Brexit to be taken off the table and for removal of the uncertainty hanging over the UK economy caused by the ongoing Brexit chaos.

The UK would benefit from a ‘deal dividend’ if the Brexit issue could be resolved satisfactorily, he said. The economy could be expected to be growing at 1.6% per annum by 2021 if that were the case. Growth is expected to be 1.2% this year and 1.4% in 2020 rising to 1.6% from 2021-2023.

Borrowing, said the Chancellor, was due to fall in every year of the forecast and he told the House of Commons debt will fall as a share of GDP and would be just 13.5bn in 2023-2024.

Transforming cities and the future of mobility

Of announcements of interest to fleet operators – scant though they were – the Chancellor gave further details about his Transforming Cities Fund – £60 million of investment in 10 cities across England – announced at Budget 2017.

This will fund 30 new schemes such as bus station upgrades, new cycle lanes and road improvements, supporting the wider programmes being delivered by city regions as part of the Industrial Strategy, he said.

The 10 cities were selected for the competitive fund in September 2018, and are as follows:

  • Derby and Nottingham: £7.2 million
  • Southampton: £5.7m
  • Leicester: £7.8m
  • North East: £10m
  • Portsmouth: £4m
  • Norwich: £6.1m
  • Sheffield City Region: £4.2m
  • Plymouth: £7.6m
  • West Yorkshire: £2.2m
  • and Stoke-on-Trent: £5.6m

And over the coming months the Government will publish ‘Future of Mobility: Urban Strategy’, a publication setting out its approach to putting the UK at the forefront of mobility, and responding to the significant changes taking place in transport technology – such as the growth in electric vehicles, the development of self-driving vehicles and advances in data and internet connectivity.

However, the Statement contained little detail on vehicle taxation – and certainly none of the clarity that many wanted to see.

Martin Brown, managing director of Fleet Alliance, said: “As a Spring Statement it was something of a damp squib and was completely overshadowed by Brexit.

“The clarity over the impact of WLTP on various car taxes that we have all sought has been deferred, presumably until the Chancellor is no longer pre-occupied with the details of our leaving the European Union.

“And it would seem that all other issues, such as incentives for electric vehicles through preferential tax rates or fairer tax treatment for diesels have been consigned to the file marked ‘for another day’. I guess we will have to wait until the Budget to see what the Chancellor really has in store for us.”

 


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