Chancellor Rishi Sunak has delivered the Autumn Budget and Spending Review at the House of Commons, bringing more work to tackle the driver shortage and a freeze on fuel duty, but missing opportunities to support the fleet and EV sectors.

The Autumn Budget 2021 is intended to “begin the work of preparing for a new economy post-Covid

It’s the second Budget to be delivered this year by the Chancellor and is intended to “begin the work of preparing for a new economy post-Covid” based on the Prime Minister’s “economy of higher wages, higher skills, and rising productivity”.

Some of the main announcements were on a 6.6% increase to the National Living Wage, the OBR’s prediction that inflation will hit 4% and that the economy will grow 6.5% this year instead of the expected 4%, and that public sector pay increases have been reinstated.

While there were few fleet-specific announcements, some were more directly related to operators.

Fuel duty rise axed

The main news for fleets was the confirmation that the planned fuel duty rise will be scrapped for a 12th successive year.

The widely anticipated move means fuel duty will be held at 57.95 pence per litre, staving off the planned 2.8ppl rise.

The announcement came after many organisations had lobbied for a further fuel duty freeze, in particular after fuel prices hit a new record high.

Edmund King, AA president, said it was a “pragmatic approach”. He continued: “Our research suggests that when fuel prices are high, lower-income drivers cut back on general household expenditure, including food and heating, to keep their cars on the road. Freezing duty will help these drivers.

“We will though be looking for more fiscal and infrastructure incentives to support our COP26 positioning to ensure that the UK ‘gets electric done’ as soon as possible. Fleets and company car drivers have a vital role as their new EVs soon find their way onto the used car market.”

Lex Autolease also agreed that a fuel duty freeze was the right move – for now.

Iryna Kocharova, head of sustainability, said: “As momentum continues to shift away from petrol and diesel, an alternatively fuelled future can’t happen overnight. The affordability of electric vehicles remains a key barrier towards adoption for many small businesses and private drivers, with an ICE vehicle remaining the only option for some.

“With rising fuel prices against the backdrop of the ongoing pandemic recovery, a 12-year fuel duty freeze remains a sensible move; however, if the UK is serious about leading the EV charge, then sustained investment from policymakers which accelerates the UK’s electrification plans has to stay at the top of the agenda.”

No insight on company car tax

While the Government confirmed that the company car tax rates already announced for 2022/23 will remain frozen until 2024/25 – as announced at Budget 2020 – there was no news on rates going forwards.

That’s despite calls from the industry, in particular the Association of Fleet Professionals (AFP) and BVRLA, for extra insight to help the sector plan ahead and support the Government’s 2030 electrification deadline.

Gerry Keaney, BVRLA chief executive, said: “The Chancellor has missed an opportunity to give the industry essential clarity when it is most needed. At a time when the uptake of electric vehicles is ready to accelerate, the silence around areas such as Benefit-in-Kind tax rates is deafening. This only grows fears that rates will be drastically increased down the line.

“BVRLA members had clear asks for this Budget. The Chancellor has failed to give tangible details on these asks, meaning that questions remain over what the Government’s plan is. The Net Zero Strategy last week marks a very positive step in the right direction; what we needed in today’s Budget was more detail. Instead, we have been given headlines that offer no clarity, no foresight and no confidence.”

And Matt Cranny, director – complete brand, leasing & supplier management at ARI Fleet, added: “The lack of clarity of BiK rates beyond 2025 does not help with planning, especially for fleets who operate longer than average replacement cycles. The worry is making decisions now on facts that may change in the near future.”

Roads and infrastructure

Highlighting how infrastructure “connects our country”, the Chancellor made a number of further commitments on roads and maintenance as part of the National Infrastructure Strategy published last year, bringing the total committed to economic infrastructure since the publication of the NIS to more than £130bn.

Announcements in the Autumn Budget included investments of £21bn on roads, as well as £5.7bn for London-style transport settlements in regions from Greater Manchester to the West of England.

Sunak also pledged £2.6bn for a long-term pipeline of more than 50 local roads upgrades over five years, along with more than £5bn for local roads maintenance – enough to fill one million more potholes a year – and funding for buses, cycling and walking totalling more than £5bn. The Chancellor also said there would be funding of £46bn on railways and the Integrated Rail Plan would be published “soon”.

Scotland, Wales and Northern Ireland will also get extra cash through the Barnett formula, used to allocate central funds to parliaments and assemblies in the devolved nations.

Commenting on the local roads funding, Rick Green, chair of the Asphalt Industry Alliance, said: “We welcome that the Chancellor has announced a five-year spending commitment for local roads, but the sums announced today suggest little movement on current levels – so we look forward to reviewing the detail.

“ALARM 2021 reported that the backlog of repairs is now more than £10bn, with local authorities reporting that if they had sufficient funds to meet their target conditions there would be an additional 14,400 miles of roads in a good state of repair and another 2,000 fewer miles in urgent need of repair.

“What’s needed is an investment of at least an additional £1.5bn per year from Central Government sources on 2021 levels if the backlog of repairs is to be tackled and further decline prevented.”

Nimesh Chauhan, director – complex Brand at ARI Fleet, also commented: “The exciting news will be how the transport infrastructure commitment (and plans) for cities outside of London will shape up and how these funds will be allocated. Covid has made us all reliant on private vehicle usage – and movement to encourage public transport will be key.”

Charging and electric vehicles

The Budget and Spending Review also confirmed additional funding to support the 2030 ICE ban for cars/vans and HGVs by 2040. As announced in the Net Zero Strategy, the Government will provide an additional £620m for public charging in residential areas and targeted plug-in vehicle grants.

The Budget also pledged £817m for the electrification of UK vehicles and their supply chains, to support investment in zero-emission vehicle manufacturing, gigafactories and the electric vehicle supply chain; part of the £1.4bn over the Spending Review 2021 period for the Global Britain Investment Fund.

Tim Buchan, CEO of Zenith, said: “It’s promising to see the Government’s ongoing commitment to greener transport, particularly in its continued investment in EV charging infrastructure. Today’s announcement represents a total £2.8bn investment in the EV sector by 2030, which shows commitment towards achieving the Government’s net zero targets.”

HGV driver measures

The Government announced plans to support the haulage industry, including by investing £32.5m in roadside facilities for HGV drivers on the road and in new skills bootcamps to train an additional 5,000 drivers. Other measures include increasing the number of HGV driving tests, freezing vehicle excise duty (VED) for HGVs and suspending the HGV road user levy for another 12 months from August 2022.

Matt Cranny, director – complete brand, leasing & supplier management at ARI Fleet, said: “The HGV levy freeze being extended from August 2022 until 2023, along with the freeze in VED for next year, is welcome given the cost pressures on running HGVs due to the current driver shortage. Likewise the £32.5m promised in roadside facilities for HGV drivers will be welcomed, although it will be interesting to see what impact it makes in the short term.”

And also

• UK-wide investment of £240m for the Net Zero Hydrogen Fund and £140m to establish the Industrial Decarbonisation and Hydrogen Revenue Support scheme
• Car/van fuel benefit charge: to uprate by CPI in 2022/23
• Van benefit charge: to uprate by CPI in 2022/23
• VED rates for cars, vans and motorcycles to uprate in line with RPI

Fleet and automotive sector reaction to the Budget:

Paul Hollick, chair, AFP

“It’s no great surprise but there is little in the Budget of direct interest to fleets. Certainly the freeze in fuel duty is welcome but not unexpected given the rate of petrol and diesel increases seen in recent months, and the additional funds that have been made available for kerbside charging are welcome but were leaked long in advance. There are some areas of disappointment. The biggest of these is the absence of Benefit-in-Kind taxation tables for 2025/26, for which we’ve been campaigning and remain an issue for fleets embarking on electrification. We would also have welcomed any sign of future discussion on the Government’s future thinking on road pricing, but it appears that conversation remains some way into the future.

“In a wider sense, the good news is that the economy is a relatively good place following Covid – or at least in a better place that could’ve once been expected – although there remains a long list of significant problems, from the semiconductor shortage to the emerging impact of Brexit.”

Matt Walters, LeasePlan UK’s head of consultancy services and customer value

“This Budget has left the fleet industry with more questions than answers. So many previously announced consultations – into VED for cars, into VED for vans, into a ZEV mandate, and more – have been allowed to pass without any confirmed legislative action. And just what is the Government planning around road pricing, which was one of the big talking points ahead of today?

“If the fleet industry is to prepare for the future, then it needs some of these unresolved questions answering as soon as possible.”

Philip Nothard, chair, Vehicle Remarketing Association

“This was not a Budget in which the motor industry featured heavily but there are some points of interest. The fuel duty freeze, vehicle excise duty freeze on HGVs and investment in better facilities for truck drivers, are all welcome, even if they are unlikely to have significant impacts.

“Really, what is more interesting is the Government’s overall efforts to keep the economy on an even keel as we hopefully emerge from the pandemic. Certainly, we are in a better place than would once have been forecast but there remain a number of factors that continue to create headwinds, ranging from inflation to supply chain issues, that are now probably bigger threats to the used car and remarketing sectors. There are reasons to be relatively optimistic but it shouldn’t detract from the fact that significant problems remain and government might have to do more to help business deal with these in the near future.”

Debbie Fox, commercial director, Epyx

“Fleets are facing a number of difficult issues at the moment – new car supply, problems arising from Brexit, driver shortages, the process of electrification and more. There was little in the Budget to help them tackle these issues directly, with the possible exception of the fuel duty freeze, but the good news is the overall economic forecast we are hearing is significantly more positive than might have been imagined when we were deep in the Covid crisis. I would broadly agree with the Chancellor when he says that growth is up, jobs are up and debt is down, but with the sizeable caveat that the points from which we started were in the depths of the pandemic when business activity was very low.

“Really, this is the most important news from this Budget – that following a massive, perhaps unprecedented economic shock, the situation is now relatively stable, although there remains potential for the problems we face to cause major, ongoing operational and cost difficulties.”

Mike Hawes, SMMT chief executive

“The effects of the pandemic continue to hurt businesses across the sector – supply chain disruption, skills shortages and punitive energy costs. The Budget included some significant steps, most notably in adjusting business rates to allow relief on renewable energy and the extension of the super-deduction. Together with the Global Britain Investment Fund which provides £817m to support the transition of automotive manufacturing and the £620m announced last week for incentives, as well as investment in charging infrastructure, these are a recognition of the importance of the automotive sector and its ability to drive innovation and exports, and to create well-paid, highly skilled, green jobs across the country.

“However, if we are to attract the investment in plant and machinery that a modern, competitive and decarbonised industry needs, a more fundamental change in business rates is still necessary – one that actually incentivises the continued investment that factories need to be at the cutting edge of operational efficiency. The Budget was also a missed opportunity to support the many supply chain businesses which are suffering cash flow shortages due to stoppages arising from the semiconductor shortages.”