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Motor industry urges Chancellor to make clear statement on the euro

The motor industry today called for the Chancellor to clarify the government's position on the single currency in the Budget next Wednesday.

With no clear government position on the UK's entry to the euro, manufacturers say they are battling against high costs and an uncertain future. Sterling remains strong and component suppliers in particular struggle to be competitive.

Eighty per cent of vehicles exported from the UK are destined for Europe and fewer components are being sourced from British suppliers, threatening jobs in this sector. A stable and competitive exchange rate must be a government priority if companies are to continue to invest in and support manufacturing.

SMMT chief executive Christopher Macgowan said: “The motor industry is responsible for some 800,000 jobs and generates £46 billion for the UK economy. It simply doesn't make sense for the Chancellor to continue to ride on waves of uncertainty coupled with high exchange rates while loading manufacturers with new taxes. As we wait for a decision on the single currency, companies are sinking under a raft of tax and currency pressures.”

Companies in the automotive sector will be hit by the Climate Change Levy on 1 April, increasing net energy costs by 10 to 15 per cent. Although the SMMT has negotiated a discount for several vehicle manufacturers, it says the narrow qualifying criteria mean few in the sector can benefit.

Those that have already invested in energy saving will be unfairly penalised because they do not run processes covered by the pollution prevention and control directive. The SMMT has urged the government to broaden discount criteria to reduce costs for those demonstrating a real commitment to reduced energy use.

On the issue of the End of Life Vehicles Directive, involving the free take back of vehicles by manufacturers, the SMMT says this will create more costs for vehicle manufacturers.

Producer responsibility must not be imposed any earlier than stated in the Directive, when its rules are implemented in April 2002, the SMMT believes.

The industry also believes costs of disposal should be fairly distributed among all the beneficiaries of a vehicle throughout its life, not just the manufacturer. The government, oil industry, insurance industry and recycling industry all take significant revenue from the car throughout its life. They should contribute to the recycling costs, says the SMMT.

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