The Finance and Leasing Association (FLA) is set to make submissions urging Government to extend its COVID-19 business lending and introduce tax incentives to boost the adoption of alternative fuel vehicles (AFV).
The FLA will co-host a roundtable event with Paul Scully MP, Minister for Small Business, tomorrow (September 18) alongside the Association of Chartered Certified Accountants (ACCA) to outline a series of recommendations for a new Comprehensive Spending Review designed to help kickstart the economy.
Stephen Haddrill, director general of the FLA, said: “Business confidence remains fragile and will be dented further if the Government turns off the Coronavirus Business Interruption Loan Scheme (CBILS) just as we enter what could be a very uncertain autumn and winter period.
“There should be parity with Term Funding, which continues until April 2021.
“The direction of the UK’s recovery needs to lead to a levelling up of the regional economies to drive greater productivity, and a positioning of businesses to ultimately achieve zero emissions by 2050.
“In the Comprehensive Spending Review, the Chancellor has an opportunity to set this course by encouraging investment – the basis of which is the availability of finance.
“Longer term, enhancing the existing Enterprise Finance Guarantee with the key features of CBILS, such as the 80% guarantee, would channel funding to businesses for new equipment and software that would transform productivity.”
Chancellor of the Exchequer, Rishi Sunak, launched the Government’s Comprehensive Spending review in July.
The review will set UK Government departments’ resource budgets for the years 2021/22 to 2023/24 and capital budgets for the years 2021/22 until 2024/25, and devolved administrations’ block grants for the same period.
Among its priorities will be: strengthening the UK’s economic recovery from COVID-19; levelling up economic opportunity across all nations and regions; improving outcomes in public services, including supporting the NHS and taking steps to cut crime; making the UK a scientific superpower, including leading in the development of technologies that will support Government’s ambition to reach net zero carbon emissions by 2050.
The FLA’s key recommendations for the Comprehensive Spending Review expand on these points:
- Level up the regions – this will ultimately increase productivity, so the FLA will be recommending that key features of the temporary Coronavirus Business Interruption Loan Scheme (CBILS) – such as the 80% Government guarantee – are transferred to the existing asset finance variant of the Enterprise Finance Guarantee Scheme to improve its effectiveness in channelling finance to businesses for capital investment, like new equipment or software.
- Increase the take up of ultra-low emission vehicles (ULEVs) – the FLA’s members currently fund 94% of all new cars purchased by consumers, so finance is critical to the rollout of ULEVs. Currently, capital allowances and the Annual Investment Allowance cannot be claimed by finance and leasing companies which purchase vehicles and lease them to businesses and consumers. If lenders, including leasing companies, could offset the purchase price of electric vehicles against their tax position, this would enable them to offer much more competitively priced finance or rental payments for ULEVs, putting them within the reach of more consumers and fast tracking the UK’s progress towards zero emissions.
Earlier this month the Society of Motor Manufacturers (SMMT) renewed its call for incentives to boost the uptake of AFVs as analysis compiled with the help of Frost & Sullivan revealed that spending of at least £16.7 billion was required to get the UK’s public charging network ready for mass EV market.
SMMT chief executive, Mike Hawes, said: “To give consumers confidence to take the leap into these technologies, we need government and other sectors to step up and match manufacturers’ commitment by investing in the incentives and infrastructure needed to power our electric future."