Chancellor of the Exchequer Rishi Sunak has revealed the details of the 2021 Autumn Budget, outlining the government’s spending plans for the future.
The key points from the 2021 Autumn Budget affecting the automotive industry are:
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- £6.1bn investment to reduce transport emissions – includes £620m of new funding for public chargepoints and targeted zero emission vehicle grants.
- £800m investment in the production of electric vehicles in north-east England and the Midlands.
- Planned rise in Fuel Duty has been cancelled.
- £3.8bn increase in skills spending, including a £2.7bn increment for apprenticeship funding in 2024/25.
- UK’s target for spending £22bn a year on research and development will be delayed until 2026/27.
- 50% business rates discounts for businesses in the retail sector.
Industry reaction
Mike Hawes, SMMT chief executive, said: “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.”
Sue Robinson, chief executive of the NFDA, said: “The business rates discount will be crucial to continue to support businesses as they complete their recovery. Going forward, we will continue to liaise with the relevant departments to go further in addressing the imbalance between online tax and the rates paid by businesses relying primarily on their physical presence such as vehicle dealerships.”
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By GlobalDataSimon Goldie, director of business finance at the FLA, said: “This welcome move provides some certainty on business funding in the interim, albeit with a lower guarantee of 70%, but a permanent successor to the RLS must be developed.
“We have already recommended to Government that the new scheme should retain the best features of the RLS – the assignment of guarantee and retention of the lender fee arrangement. But it should also mirror the abiding principle behind the Enterprise Finance Guarantee asset finance variant, which was designed to ensure that lenders could provide funding for either assets or businesses that were outside of their usual risk appetite. This was a very successful way to get funding into every corner of the economy.”
Seán Kemple, managing director at Close Brothers Motor Finance, said: “We are finally starting to see the government put its money where its mouth is when it comes to investing in greener roads. An additional £620 million into public charging in residential areas and targeted plug-in vehicle grants will be a critical acceleration in the path to Net Zero, and will help encourage drivers to transition to electric vehicle ownership. Investment in charging points is an infrastructural necessity if we are to embed the use of electric cars into our everyday lives.
“The Chancellor’s decision to introduce a 50% cut in business rates will provide some relief for dealers still recovering from the impact of forecourt closures on their business, by helping them lower costs and trade more profitably. The motor industry is vital to the economy more broadly, and dealers are the backbone of the car industry, so they mustn’t fall to the bottom of the priority list.”
Paul Burgess, chief executive of Startline Motor Finance, said: “There is no denying that the economy continues to suffer from the effects of Covid, Brexit, the semiconductor shortage and more. The impact of all of these factors is difficult to predict over time and, in addition, it seems very likely that many people will find their personal spending power noticeably reduced over the coming year and longer.
“From a motor finance point of view, we don’t believe these represent specific threats to the current buoyancy of the used car market and expect a strong 2022 – but it should definitely be noted that the road ahead for the general economy could be pretty bumpy.”
James Tew, chief executive of iVendi, said: “There are a whole host of potential downsides in play – from the forecast 4% inflation for next year through to the ongoing effects of Brexit and the semiconductor shortage – that were not really tackled in any meaningful way. If there are any threats to the new and used sectors in the short and medium term, this is where they will lie. However, our overall view remains that the market should be able to maintain momentum very close to its current level.”
Sepi Arani, commercial director at carwow, said: “If the government wants to show real ambition and actionable commitment, we should be targeting electric and hybrid vehicles to out-sell conventional petrol and diesel-powered vehicles by 2023.
“As we’ve seen in Germany, where there are more generous schemes aiding the switch to EVs including across a range of prices and types of vehicles, it is entirely possible to accelerate the consumer transition. EVs (electric vehicles) and hybrids make up 30% and 20% of our total sales on carwow in Germany already. We need a clear plan based on common sense and end-user practicality, in place of churning out vanity metrics with plans made from behind computer screens rather than out in the real world.”
