Chancellor of the Exchequer George Osborne delivered the Government’s annual Autumn Statement in the House of Commons yesterday (Thursday, December 5).
Sometimes described as a mini-Budget, he revealed to the nation the state of the country’s economy and public finances, in line with the latest economic forecasts from the independent Office for Budget Responsibility.
Mr Osborne said: “Britain’s economic plan is working. But the job is not done. We need to secure the economy for the long term.”
Twenty-four hours earlier Chief Secretary to the Treasury Danny Alexander published the 2013 update to the Government’s National Infrastructure Plan which contained details on £375 billion worth of “pipeline projects” of which around £100bn are in the transport sector.
The 152-page National Infrastructure Plan 2013 is an update to the programme first published in 2010. The document outlines the Government’s infrastructure spending plans for the next two decades and includes 646 projects of which 291 have been started or are complete.
Mr Osborne said that Britain’s infrastructure “needs to be overhauled” and added: “We need new roads to compete in the world. Investing in the physical infrastructure of our country is critical to our future success.”
Below we highlight what the Chancellor said in relation to the UK fleet industry and the wider motor industry in the Autumn Statement and the impact of the National Infrastructure Plan 2013.
The Chancellor has cancelled next year’s planned 1.6p a litre rise in fuel duty which ensures the tax will be frozen for the remainder of the current Parliament.
It is the latest planned fuel duty increase proposed and then axed by the Government and means that duty will have been frozen for almost four-and-a-half years, the longest freeze for more than 20 years.
As a direct result of Government action, fuel duty in real terms is forecast to fall over the course of the current Parliament by 14%. Had the Government implemented pre-2010 plans for the fuel duty escalator, rates would have increased by 7%, it says.
Mr Osborne claimed that it means that compared to the previous Government’s plans, petrol would be 20p a litre less by the end of the current Parliament compared with pre-2010 plans, which was equivalent to an £11 saving every time a driver filled their tank by 2015/16. The 1.6p a litre rise was due on September 1, 2014.
The Chancellor said that as a direct result of Government action since 2011, its strategy on fuel duty would save drivers £680 by 2015/16, a small business with a van would save £1,300, and a haulier £21,000 compared to pre-2010 plans for a fuel duty escalator.
He added: “Cancelling fuel duty rises has been a major priority of the Government. A £22.5 billion demonstration that we’re on the side of hardworking people in this country.”
The 130-page book detailing what the Chancellor announced in the Autumn Statement also revealed that to incentivise a shift to cleaner, cheaper fuel, the Government was committed to maintaining the current differential between the main rate of fuel duty and the rate for road fuel gases such as Liquefied Natural Gas (LNG) and Compressed Natural Gas (CNG) for 10 years until March 2024.
The differential between the main rate and the LPG rate will continue to reduce by 1p a litre each year to 2024. The Government says it will review the impact of the incentives on vehicle uptake and the public finances at Budget 2018. The Government says it will also seek European Union approval to apply a reduced rate of fuel duty to methanol.
The Chancellor said: “This will provide businesses with the certainty they need to invest in alternatively fuelled commercial vehicles, supporting the de-carbonisation of the UK transport sector and contribute to reducing the transport fuel costs of businesses.”
The Autumn Statement also confirmed that the Government would aim to reduce the “high” costs of fuel on motorways with the trialling of new comparison road signs which will show pump prices at different service stations along a route, making it easier for drivers to find the cheapest deal and encouraging competition on prices.
Vehicle Excise Duty
The tax disc is to be consigned to history with the Chancellor announcing that it will be scrapped from October 1, 2014 - but that does not mean the end of Vehicle Excise Duty.
The Government says that from that date the paper tax displayed in the windscreen of a vehicle will no longer be issued.
Abolition of the tax disc has been made possible because of the increasing use of an electronic register of cars, vans and lorries linked to number plate recognition equipment to identify tax dodgers.
The move is aimed at reducing the administration burden and costs by about £7 million. The disc was described in the Autumn Statement as an “administrative inconvenience for millions of motorists”.
The move is part of the Government’s on-going bid to cut administration costs and follows lengthy consideration of the future of the tax disc by the Department for Transport. Organisations including ACFO (Association of Car Fleet Operators) and the British Vehicle Rental and Leasing Association have been among those calling for its abolition.
Late last year the Department for Transport published a consultation document focused on the reform of its four motoring services agencies - the DVLA, Driving Standards Agency, Vehicle and Operator Services Agency and the Vehicle Certification Agency. In its vision of the future, the Department said it would “consider the continuing need for the tax disc”.
Vehicle tax was introduced in the 1888 Budget and the current system of excise duty applying specifically to motor vehicles was introduced in 1920. The tax disc was introduced in 1921 as a receipt to indicate that excise duty had been paid for the vehicle on which it is displayed. The first tax discs had a plain design of black ink on grey paper which drivers had to cut out themselves. Coloured tax discs were introduced in 1923.
Additionally, the Chancellor says that motorists will be able to pay their Vehicle Excise Duty by direct debit annually, bi-annually or monthly. A 5% surcharge will apply to bi-annual and monthly payments, although that is reduced from the current 10%. Motorists will still be able to tax their cars by telephone or in person at a post office as well as online.
Company car tax
To protect tax revenues, and taking effect from April 6 2014, the Government will introduce legislation in the 2014 Finance Bill to:
HMRC will publish a “taxpayer information and impact note” on Tuesday (December 10).
Car fuel benefit charge 2014/15
Employees who are in receipt of company-funded fuel used privately will see their benefit-in-kind tax bills rise from April 6, 2014.
The Chancellor announced in the Autumn Statement that the fuel benefit charge multiplier for company cars will increase from £21,100 in 2013/14 to £21,700 in 2014/15.
Van benefit charge2014/15
The van benefit-in-kind tax charge will increase from £3,000 in 2013/14 to £3,090 in 2014/15, the Autumn Statement has confirmed.
Van fuel benefit charge 2014/15
From April 6, 2014 the van fuel benefit charge multiplier will increase from £564 to £581, the Autumn Statement has confirmed.
The statutory maximum price of the MoT test for a car will be frozen at £54.85 until 2015, a total saving of £50 million for motorists, the small print of the Autumn Statement revealed.
Plans to introduce road charging on key new roads appear to have been dropped by the Government following its decision to abandoned proposals to charge drivers for travelling along a new section of the A14 in Cambridgeshire.
Originally the Government had planned to toll the new 25-mile stretch of the heavily congested A14 close to Huntingdon.
However, amid widespread opposition to charging drivers for travelling along the road, which carries traffic from the port of Felixstowe to the Midlands, the Government admitted tolling was now no longer part of its plans.
Additionally, the National Infrastructure Plan 2013 reveals that the Government does not plan to introduce tolling to help fund the construction of other proposed new and upgraded roads. Therefore, it would appear that any idea of charging drivers to travel along key routes in the future has been abandoned by the Government.
Construction of the new section of the A14 is due to start in 2016 and the work will instead be funded from general taxation.
Prime Minister David Cameron had said he understood the strong opposition to the proposal to charge motorists on what would have been Britain’s first toll road for a decade. The plan had been to raise 20% of the overall £1.5 billion cost from tolls.
The Highways Agency had said that charges could be set at between £1 and £1.50 for cars using the 12-mile stretch of toll road close to Huntingdon, and about double that sum for lorries, although these figures were not finalised. Overnight trips were to have been toll-free.
But Chief Secretary to the Treasury Danny Alexander in announcing the annual update to the Government’s first National Infrastructure Plan published in 2010 said the tolling idea had been abandoned with the cost of the road being met by the Government.
The Government is charging up its plans to increase public sector fleet penetration of electric vehicles with a £5 million investment in a large scale “readiness programme” in 2014-15.
The Government says the initiative is aimed at promoting the adoption of ultra-low emission vehicles and demonstrating clear leadership by the public sector to encourage future widespread acceptance.
The cash is in addition to the summer 2013 announcement that saw the Government commit £500 million to support the take-up of ultra low emission vehicles, which is in addition to the £400m it is currently investing through a number of initiatives. Chief Secretary to the Treasury Danny Alexander in publishing the National Infrastructure Plan said that details of how the £500m cash pot would be spent would be announced soon.
The document said: “Transport will play an important part in meeting the Government’s environmental targets. As part of this there is a need to shift to more environmentally sustainable technologies and fuels, and to promote lower carbon transport choices.
“Over the next decade, the biggest reduction in emissions from domestic transport is likely to come from efficiency improvements in conventional vehicles, specifically cars and vans, driven primarily by European Union targets for new vehicle CO2 performance.
“Over this period an increasing numbers of ultra-low emission vehicles are also expected to come to market. Government is committed to speeding the transition to ultra-low emission vehicles by addressing areas where the market alone might not deliver the best outcomes in the shortest possible timescale.”
The Government is to review the legislative and regulatory framework for developing and testing driverless cars in the UK, reporting by the end of 2014, and plans to create a £10 million prize for the development of a town or city as a testing ground.
The announcement was contained in the National Infrastructure Plan 2013 update, which highlighted the potential for driverless cars in the UK.
The document said: “Driverless cars are innovative technology that will change the way the world’s towns and cities look and the way people travel; they present opportunities for the British automotive industry in the manufacture of the cars and the wider science and engineering sectors in the design of towns.
“To ensure that UK industry and the wider public benefit from the development of driverless cars, the Government announces in the National Infrastructure Plan that it will conduct a review, reporting at the end of 2014, to ensure that the legislative and regulatory framework demonstrates to the world’s car companies that the UK is the right place to develop and test driverless cars. It will also create a £10 million prize for a town or city to develop as a testing ground for driverless cars.”
Chief Secretary to the Treasury Danny Alexander added: “At present, the main advances in driverless car technology are happening in California. Apparently they’re making progress, [but] the National Infrastructure Plan contains plans to put our country at the forefront of driverless car technology.”