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SMMT welcomes Budget, RMI voices scepticism

The motor industry has largely welcomed Chancellor Gordon Brown's budget and in particular measures that leading figures say will maintain economic stability.

The key changes affecting the industry announced yesterday were to:

  • consult the motor industry on tax credits for research and development
  • give VAT relief to small businesses with turnover up to £100,000 per annum
  • cut fuel duty on ultra low sulphur petrol by 2p per litre
  • cut the duty on ultra low sulphur diesel by 3p per litre
  • cut the duty on liquified petroleum gas by 6p/kg
  • freeze the current Vehicle Excise Duty on cars
  • backdate the £55 VED reduction for cars up to 1,500cc to November 2000, implemented in July 2001
  • cut duty on bio-diesel fuels by 20% from next year

    SMMT chief executive Christopher Macgowan said of the changes: “We welcome the opportunity to consult on tax credits for research and development. Cuts in fuel duty will also go some way to reduce the tax burden on the industry and motorists.”

    Disappointing was Mr Brown's failure to clarify the Government's position on the euro, he said.

    The SMMT is also concerned about the implications of the new four-band VED system based on CO2 emissions, “particularly as it will run alongside the existing system for cars registered before April 1 this year based on engine size”.

    Ian McAllister, Ford Britain chairman and managing director, said: “We welcome the priority given to maintaining economic stability, particularly the Chancellor's commitment to low levels of inflation and interest rates.

    “We are particularly pleased the VED will be frozen and that the current reduced licence fee for new cars with engines of less than 1.2 litres has been extended to 1.5 litres. Some 36% of Ford's new car customers will benefit from the reduction.”

    Mr McAllister also believes the 3p per litre reduction in ultra low sulphur diesel will encourage “environmentally aware” motorists to consider more fuel efficient and technologically advanced diesels.”

    However, the Retail Motor Industry Federation was scathing of the new VED system.

    “Whilst we welcome any price cut for the hard-pressed motorist, this announcement is a rather crude instrument because it totally fails to recognise advances in engine technology,” said David Evans, RMI chief executive.

    “It is disappointing that the Government is not recognising the advance in cleaner technology in engines of all sizes rather than just focusing on smaller engines.

    “It is often the smaller, older, unserviced car that causes the most pollution.”

    And, the RMI says, the UK motorist will continue to pay the highest fuel prices in Europe, despite fuel duty cuts.

    “But you have to start to put this right sometime and the Chancellor has, by freezing duty on LPG until 2004 and encouraging the development of new cleaner fuels for the future.”

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