As the Chancellor readies for tomorrow’s Autumn Statement, the fleet and automotive sectors have revealed some of their top requests for changes.
Ahead of Wednesday’s Autumn Statement, pressure is mounting on Chancellor Jeremy Hunt to take action to help support the fleet industry and the wider automotive sector, in particular when it comes to EVs.
As a general election looms, Prime Minister Rishi Sunak confirmed Monday that tax cuts will feature in the Autumn Statement on the back of an unexpected fall in inflation.
It’s expected that the focus of tomorrow’s statement will be on helping struggling families with the cost of living – and according to reports, personal tax cuts have already been confirmed, while an inheritance tax cut has also been rumoured along with changes to benefits.
However, businesses are also expected to be a priority and lower business levies could be on the cards in a move to boost the economy.
While fleet is likely to be less of a priority, industry leaders have outlined areas where change is needed.
Fleetcor’s top three wish list for UK fleets
Paul Holland, managing director for UK/ANZ Fleet at Fleetcor, warns that the Autumn Statement takes place during a transitional phase for the UK’s fleets, and road users in general.
Following the Prime Minister’s delay to the 2030 ICE ban, Holland says net zero has slipped down the agenda at No 10.
He adds: “Even if the Government has momentarily stalled in its drive towards an electric future, fleets themselves and road users in general have powerful incentives to switch away from fossil fuels, which is why we’re still seeing an increase in electric vehicle usage even after the grants for EVs have ceased.
“There are three factors driving the use of EVs, even when the government is moving away from incentivising them: price, sustainability and flexibility. These three factors drive what we would want to see from the Treasury.”
1. Fuel prices need to go down
Holland says: “Whether fleets use petrol, diesel, electricity or, as is increasingly likely, a combination of all of the above, they are all reporting that the prices they pay at the plug or pump are eating away at their profits. While the Government doesn’t control fuel prices, it could be doing more to bring them down.”
2. Infrastructure still needs support
“Despite the huge rise in the number of EV charging points in the UK, there is less support for alternative fuels, which can significantly improve the sustainability of the UK’s fleets, especially those that use HGVs that cannot use electric charging,” says Holland.
3. Help for small fleets
“Although a significant number of larger fleets are already using EVs, smaller companies often lack the ready cash to buy EVs. These smaller fleets make up a significant number of the vehicles on the road, so giving them incentives to be more flexible with the kinds of vehicles they use would make them more competitive and drive growth,” he finishes.
More support for electric vehicle take-up
Ashley Tate, MD, Allstar Chargepass UK, agrees with many of Fleetcor’s comments, including on support for EVs.
Previous government fiscal events have introduced significant incentives for the UK’s public and the private sector to buy and use electric vehicles – and Tate says more action is needed.
He comments: “The UK’s fleets are far from being fully electric. The question remains as to whether the momentum can be maintained, especially since the 2030 delay to 2035 for the cut-off for the sale of petrol and diesel vehicles, the price of electricity remaining high and HGVs providing a tough nut to crack to electrify. We know that transport accounts for 34% of all greenhouse gas emissions, so if the country wants to reduce this and reach net zero then it would be a sensible place to start – although the recent moves against ULEZ and 20mph zones in Wales would indicate that the Government is pursuing a more laisse faire approach to regulating the nation’s roads.”
Tate has also warned that with the ICE ban now pushed to 2035, businesses and consumers need clarity on what support they can expect in the near future. For example, knowing whether the Government intends to change the Benefit-in-Kind rates ahead of the ICE ban.
“Most importantly, we don’t want to see backtracking on any of the great work done already to incentivise businesses and consumers to make the transition to EVs,” he outlines.
And Tate says support is particularly needed among smaller fleets, as it warns that larger fleets, such as major logistics firms, have sustainability incentives to win business and more access to ready capital to meet them.
Tate adds: “Such businesses make up a significant part of the commercial vehicles on Britain’s roads, so schemes that target support to these smaller companies could reduce emissions significantly while not costing too much.”
Action on fleet charging
Ashley Tate has also called for the Government to introduce a new grant for businesses to install home EV chargers for their employees.
“One of the reasons why businesses are holding off on the EV transition is that public charging is expensive but home charging is significantly cheaper as you can take advantage of lower rates overnight – often less than half the price. From our latest data, we know that on average it is 55p per kWh cheaper to charge at home than it is in public, spreading that reduction over a fleet could be an incredible money-saving exercise that also helps decrease environmental impact.
“With something as little as £1,000 off of, or going towards, the implementation of EV chargers, businesses can start to reap the rewards of transitioning from day one.”
And Tate also calls for work to tackle the “charging inequality challenge”, warning that more investment needs to be made in kerbside charging to support those drivers unable to charge at home.
VAT cut on public charging needed to boost EVs
Some commentators are predicting a cut in VAT charge on public charging to boost EVs.
Currently, VAT on domestic electricity is charged at 5% whereas those using public charge points have to pay 20% VAT – prompting longstanding calls to tackle an ‘illogical’ and ‘unfair’ approach.
Tax consultancy MHA has said that a VAT cut on public charging is essential to support the ZEV mandate from 2024 and ensure that EVs become more attractive to buyers – in particular private buyers.
Alastair Cassel, partner at MHA, comments: “We have significant investment being made in charge points and a reduction in VAT to parity with the domestic electricity rate of 5 % would help with the total cost of ownership cost and also would continue to encourage further infrastructure investment.”
Abhishek Sampat, head of electric vehicles at online car marketplace Cinch, agrees: “A potential VAT reduction on public charging from 20% to a rumoured 5% is not just a win for the industry but a huge budget booster for drivers of electric vehicles. Currently burdened with a 20% VAT, those unable to charge at home, which is estimated to be 60% of the population, face a financial hurdle that could be too big to overcome if they wanted to switch away from petrol-fuelled cars.
“The VAT reduction could lead to an estimated drop from a UK public charging average of £0.68 to £0.60 per kWh. That equates to an EV driver being £250 better off if they were covering 10,000 miles annually. That’s a big impact and something we eagerly support.”
EV scrappage scheme
There are also fresh calls for a scrappage scheme to accelerate EV adoption ahead of the Autumn Statement.
Flexible leasing firm Sogo argues that a scrappage scheme is essential to help drivers move to EVs at a time when the cost-of-living crisis and higher energy costs are proving a deterrent.
Managing director Karl Howkins says: “We have seen the effective use of scrappage scheme nationally in the past and currently in London, where the mayor provided funding of £160m. It’s clear that tax incentives are helping to drive the adoption of EVs in the fleet sector, but the private motorist has fewer reasons to make the leap.
“I’m calling on the Chancellor to introduce a national scrappage scheme to remove older, more polluting vehicles from our roads and incentivise the move to EVs. The initiative could be introduced quickly and would immediately impact our journey to net zero.”
Experts are also calling on Jeremy Hunt to extend the fuel duty freeze and the current 5ppl rate introduced in the 2022 Spring Statement.
Gerry Myton, head of indirect tax at chartered accountants HW Fisher, says: “Continue the freeze on fuel duty, or risk fuelling inflation instead.
“Let’s hope that the thirteenth year of fuel duty freezes isn’t an unlucky one. Many forget that VAT is added on at the pump, so if the Chancellor decides to reverse the 5p fuel duty cut this week, customers will see a 4% increase – around 6p per litre – to the price of fuel. Not only would this alienate motorists up and down the UK, it would be at complete odds with the Government’s mission to keep inflation under control.”
Focus on cheaper and greener public transport
Campaign for Better Transport has urged for the Chancellor to use the Autumn Statement to shift the balance of funding away from roads and cars, and towards cheaper and greener public transport instead.
It says that recent Government policies have sought to prioritise driving over all other modes of transport – and brands this a “retrograde step” that will increase congestion and carbon emissions.
The transport charity says that reallocating more than a third of the money ‘saved’ from the cancelling of the northern leg of HS2 away from public transport to road schemes to increase capacity on the road network will “be of no long-term practical benefit to drivers”.
It’s instead calling for the Chancellor to prioritise investment in sustainable transport and existing roads and to redirect significant amounts of capital expenditure from roads to public transport infrastructure, amongst other measures.
Automotive technician recruitment, training and growth
Finally, the Institute of the Motor Industry (IMI) has set out its own ‘wish list’, focused on where support could make a difference for automotive technicians.
It warns that the delay on the ban of the sale of new petrol and diesel vehicles has left some automotive businesses wondering whether their early investment in training was worthwhile.
And it’s calling for help in areas including reduced rates to help motor businesses invest in equipment and skills for new technologies, along with action on training and growth.