Today’s Autumn Budget is a missed opportunity to fuel economic growth and minimise inflationary trends, according to PRA chairman Brian Madderson.
“While it is a welcome announcement from the Chancellor that the government will freeze both petrol and fuel duty for a further 12 months from April 2018, it falls a long way short of demands from our members and the haulage industry for a significant cut to fuel duty,” he said.
Both the PRA and the Road Haulage Association (RHA) have repeatedly called for a cut to diesel duty which would have been beneficial to the economy by reducing transportation costs for so many products, and for consumers who purchased diesel cars in good faith, encouraged by the taxation regime of former governments.
“The PRA will continue to press for fuel duty cuts to boost our economy and to move the UK towards a level playing field with fuel duty levels in EU countries as we head towards Brexit.
“At present, more than two million foreign trucks enter the UK via the short-sea ferry and tunnel routes having already filled their long-range tanks with low-tax diesel on the near continent. These vehicles unfairly compete with UK-based hauliers and contribute little to the Treasury from fuel taxes. This is a harsh anomaly which the Government needs to address without further delay.”
But Madderson was pleased that Chancellor Philip Hammond avoided increasing fuel duty - he had feared a 1ppl increase on diesel, which he said would have been a “disguised tax grab using air quality issues as justification”.
However there was concern for diesel drivers as the Chancellor announced that a Vehicle Excise Duty (VED) supplement will apply to new diesel cars first registered from 1 April 2018, so that their First-Year rate will go up by one band. This will not apply to next-generation clean diesels – those which are certified as meeting emissions limits in real driving conditions, known as ’Real Driving Emissions Step 2 (RDE2) standards’. The new rates will only apply to cars, not vans or goods vehicles.
The extra revenue raised will be put towards a new £220m clean air fund.
Sue Robinson, director of the National Franchised Dealer Association, said: “The higher tax on first registration of all diesel cars which are not certified by the Real Driving Emissions will disproportionately affect many motorists who will be looking to purchase the most efficient vehicle to suit their driving habits. In many cases, Euro 6 diesel cars still represent the most efficient and affordable vehicle.”
Meanwhile the push towards electric vehicles continued with £100million being committed to extend the grant for motorists buying plug-in cars - with a further £400million for installing electric charging points. Drivers charging their cars at work will also get a tax break.
The 2017 Budget also revealed that £150million will be put into new job training and self-driving research projects.
Hammond said: "For the first time in decades, Britain is genuinely at the forefront of a technological revolution.
"Our future vehicles will be driverless but they will first be electric - that’s a change that needs to come as soon as possible."
Robinson added, “The continued commitment from the Government to supporting the uptake of electric vehicles is extremely encouraging. This remains crucial if the Government wants to eliminate all petrol and diesel cars by 2040 as pure electric vehicles currently only represent 0.1% of the UK’s car parc.
“We are hoping that part of these funds will go towards upgrading national and local grid and we will be looking into the issue to ensure that costs of upgrades are not pushed onto private businesses and local authorities.”
Other announcements affecting forecourt convenience retailers included a rise in tobacco by 2% above RPI inflation while the minimum excise duty on cigarettes introduced in March will also rise, as will duty on hand-rolled tobacco.
Duty on beer, wine, spirits and most ciders will be frozen, but duty on high-strength ’white ciders’ will be increased via new legislation.
The National Living Wage will increase by 4.4% to £7.83 per hour from next April.
The annual indexation of business rates will be based on the CPI rather than RPI measure of inflaction from 2018, which could save businesses £2.3bn. Future business rate revaluations will now take place every three years instead of five, following the next revaluation in 2022.