On 8th March, Chancellor Phillip Hammond announced the annual budget which listed a number of prominent changes that will affect the automotive industry and motorists alike. On the other hand, the Government also elected not to change certain aspects of expenditure, for example the freeze on fuel duty in the UK remains in force for an eighth consecutive year.
This article seeks to summarise what may arise as a result of the announcements in the annual budget:
Diesel Scrappage Scheme:
A notable absentee from the Budget was a diesel scrappage scheme – the presumed initiative of choice for tackling the UK’s air pollution problem. There has been some surprise at the exclusion of this proposal.
However, Theresa May hasn’t ruled out implementing a scrappage scheme altogether and Phillip Hammond reiterated this by confirming that the Government would continue to work at addressing the UK’s air quality problem and would consider new “tax treatment for diesel vehicles” that may be announced in the Autumn budget.
The Government are intending to explore the idea of adverse tax treatment for diesel vehicles. Whilst it is unclear at this stage what this would involve, a new diesel scrappage scheme or an increase in diesel fuel duty are two ideas that have been speculated.
Despite the exclusion, several local Government organisations have already tried to discourage people from driving diesel cars, with Westminster City Council announcing an increase in parking charges for diesel operated vehicles.
A recent study has shown that the UK is the third most congested country in Europe. It is therefore no surprise that a pot in the sum of £690 million has been made allocated for Councils to “tackle congestion and get local transport networks moving again”.
Whilst this announcement appears credible, the monies have been “competitively allocated” meaning that Council’s will need to bid in order to secure the available funding. This has been met with some dismay given that some Councils have already seen a 50% reduction in their road maintenance budgets and could now find themselves having to partake in an expensive and protracted process to secure funds.
Research and Development into ‘Disruptive Technology’:
One of the major Budget announcements was an allocation of £270 million for new technologies including driverless and electric vehicles, robotics and biotech. Whilst this announcement has been altogether well received, the Government has been criticised as major investment will need to continue in order to maintain the UK’s position as Europe’s biggest buyer of electric cars. However, this is clearly a matter of importance for the Government.
Indeed, the matter of sustainable transport and ‘disruptive technology’ has been a core subject of discussion by Chris Grayling, Secretary of State for Transport, who stated that “we need to find the right way to migrate the nature of the cars to a point where they cause much less of a pollution problem than they do at the moment”.
Finance and Insurance Contracts:
The Government is also looking to simplify car finance and insurance contracts in order to protect consumers from being caught out by any unexpected fees and clauses.
Furthermore, relevant consumer bodies will also be given greater enforcement powers via proposals due to be properly announced later this year in the Autumn Budget, but the full extent of these powers are currently unknown.
Road Maintenance and Road Tax:
Finally, the Chancellor has done little to ease fears over the current state of our roads. With the number of pothole related breakdowns increasing, there has been elements of disappointment that more funding was not aimed at preventative road maintenance.
It is also worth noting that there has been no alteration to the new vehicle tax rules which are due to come into force on 1st April where drivers will pay tax in bands linked to carbon dioxide emissions levels from their car. Only pure-electric cars; which emit nothing at the exhaust pipe, will escape the charge.
Whilst the Government have made a number of promising changes, it is still unclear how the above changes will work in practice. There is however, evidence of clear themes running through the changes (such as decreasing air pollution) and it will be interesting to see whether these sentiments are built upon when the Autumn Budget is released later this year.