Chancellor Alistair Darling points to recovery, but his Credit Crunch Budget won’t help us get there explains John Lewis, chief executive of the British Vehicle Rental and Leasing Association.The 2009 Budget has provided little relief for the wider UK economy. And created extra problems for many involved in the road transport sector.
With UK borrowing at unprecedented levels the Chancellor clearly had to spread his money very thinly. So it is no surprise at the lack of any real shot in the arm for UK businesses.
However, there was plenty in the Budget to worry business car managers in the form of a vehicle scrappage incentive and a further increase in fuel duty.
Scrappage scheme criticised
The government has followed its EU counterparts in introducing a car scrappage scheme. But its attempt risks damaging the UK’s vital used car sector.
The government seems to have ignored the close link between the new and used vehicle markets. A scheme including newer, more fuel-efficient, pre-owned vehicles would have seen buyers trading-up through the used market. And eventually feeding through to new car showrooms.
By focusing its L300m scrappage fund on new cars alone, the scheme is likely to stifle the recent recovery seen in used car prices as buyers rush to showrooms to enquire about cars they probably cannot afford.
Fuel duty rebate needed
At the BVRLA we have responded to the announcement of a further increase in fuel duty from September by echoing calls for an essential business user rebate.
The government is happy to bail out the manufacturers and bankers who make vehicles and lend you the money to buy them. But it takes perverse pleasure in punishing anyone who actually wants to use one and help contribute to the UK economy.
Coming just weeks after a previous 1.84p per litre rise in fuel duty, this announcement will increase the financial burden on millions of businesses for whom road transport is an essential tool, not a discretionary luxury.
Diesel surcharge
Elsewhere in the Budget, we back the government’s decision to reduce CO2 emission thresholds for company car tax.
This is in line with what we expected in order to keep incentivising companies to use more fuel-efficient vehicles. And for manufacturers to make them. The two-year warning period means that the government has listened to our call to give businesses plenty of notice.
We recognise that the government is finally considering abolishing the unfair diesel surcharge within the benefit-in-kind company car tax regime – possibly for Euro VI compliant diesels. But we are bitterly disappointed that it will probably wait until 2014 to do so. Seeing as it has already abandoned the surcharge within the VED system, it is clearly only being maintained as a valuable source of extra tax revenues.
Capital allowances
We welcome the introduction of the temporary 40% first-year allowance to help stimulate business investment. But we’re surprised at the government’s decision to exclude the equipment hire and leasing industry from utilising this vital assistance.
Our industry would have passed the benefits of these capital allowances onto thousands of firms across the UK. This means that only companies that can access funding or make enough profit can take advantage of this help.
About the BVRLA
The BVRLA (British Vehicle Rental and Leasing Association) is the trade body for companies engaged in the leasing and rental of cars and commercial vehicles. Its members provide short-term self-drive rental, leasing hire and fleet management services to corporate users and consumers. They operate a combined fleet of 2.6 million cars, vans and trucks, buying 44% of all new vehicles sold in the UK. For more go to www.bvrla.co.uk
