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SMMT calls for action in emergency budget

The SMMT has called on the government to provide stability and certainty on motoring taxes in the June 22 Emergency Budget.


It said the budget needs to deliver

  • Long-term business confidence.
  • Stability and certainty on motoring taxes.
  • A collaborative approach to secure sustainable growth.

“The potential for growth in the automotive industry makes the sector crucial to the UK’s long-term economic development. It is vital government takes the necessary steps to nurture business and consumer confidence,” said Paul Everitt, SMMT chief executive.


“There are undoubtedly tough times ahead and government action to ease access to affordable finance will help support private sector investment in important skills and technologies need for the long term.”


He said the automotive industry requires "supportive legislative and fiscal policies" to fulfil its potential.

On providing stability on motoring taxes, the SMMT suggests:


  • Build confidence in the VED tax regime by assessing market response over a period of stability.
  • Promote the move to lower emitting vans by incentivising the purchase of vehicles with lower emissions levels, funded by progressively higher rates for models with Euro 3, 2, 1 and 0 engines.
  • Changes to company car tax rules, due to be phased in from 2010 to 2015 should be retained and the three percentage point penalty for diesel cars should be removed.
  • Fuel duty should be more clearly linked to world oil market trends, environmental goals, fiscal needs and the cost to business users. Incentives such as the cut-short boost for biofuels need to have durability and consistency.



On supporting business growth, the SMMT suggests:

  • Government should immediately address access to affordable credit to encourage renewed investment and enhance business and private demand.
  • Raising VAT could detrimentally impact the economy’s recovery and decrease the level of private car demand.
  • Businesses need confidence to plan the research and development of new technologies, so require consistency in the provision of associated tax credits. Industry has the potential to lead the country into a low carbon era, but the extent of success relies heavily on research and development.
  • Government’s aim to achieve a lower rate of corporation tax is welcomed by business, but industry has reservations over the changes to relief allowances and credits that may be required to achieve the lower tax rates.



On a collaborative approach to tackling the future, the SMMT suggests:

  • The development of the Automotive Council, plus the Technology and Supply Chain Councils, demonstrates a new era of collaboration between government and industry. This productive partnership and government’s promotion of manufacturing as a core industry must continue to ensure a strong and sustainable future for UK automotive.
  • Loan guarantees must remain in place with their development focused on providing medium-term aid to the sector.

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