With fuel duty frozen and full expensing to be expanded to leased assets, the industry has reacted to the Government’s tax and spending plans.
David Bushnell, director of consultancy and strategy at Fleet Operations, said: “The decision to cancel the planned increase in fuel duty, effectively freezing it at its current rate, must be welcomed.
“The move – in the wake of the biggest monthly rise in fuel prices in five months in February – offers a financial reprieve for the fleet sector amidst considerable economic pressures and the burgeoning challenges of operating fleets in the current economic climate.
“However, whilst there will be no additional fuel cost burden for operators of petrol and diesel vehicle fleets in the short term, it is important to highlight that while this measure aids financial planning, it does little to advance the broader objective of transitioning to more sustainable modes of transport.”
He explained: “The long overdue promise of making full expensing apply to leased assets will help support investment into low and zero emission commercial vehicles, but the Government has missed a crucial opportunity to encourage electric vehicle adoption, especially electric vans, by failing to reduce the VAT rate on public charging.
“The cost of running EV fleets, particularly those that rely on public charging stations, remains a significant barrier to adoption.
“A reduction in VAT on public charging could have served as a strong incentive for fleet operators to accelerate their shift to electrification, aligning with the UK’s ambitious environmental targets.”
Ian Hughes, CEO, corporate and consumer division at Zenith, said: “We were pleased to see motorists protected in the latest Budget, with no new tax burdens and rates of fuel duty held at the current levels for the next 12 months, meaning the overall outlook remains positive.
“However, this was a missed opportunity for Government to further drive forward the EV transition.
“The Budget was a chance to support a greater number of future EV drivers by committing further funding for the van grant and reducing the VAT burden for those relying on the public charging network.”
Matthew Walters, head of consultancy services and customer value at ALD Automotive LeasePlan UK, was delighted that the Chancellor had listened to calls from the industry to allow vans bought for leasing to benefit from full expensing “when fiscal conditions allow”.
“This is an important measure to promote investment, and we are eagerly awaiting further details in the forthcoming draft legislation,” he said.
Caroline Sandall-Mansergh, consultancy and channels development manager at Alphabet GB, also welcomed the Government announcement on full expensing.
She said: “Alongside many others in the industry, we recognise this change as crucial to ensure the new scope for full expensing is fit-for-purpose for the fleet of today.
“Many companies are turning to leasing versus outright ownership of vehicles as a more cost-effective route for investment, and as a result, these businesses will see significant benefit in tax exemption through full expensing.
“We hope the Government will provide further clarity on timelines, and that it will continue to work with leaders within the leasing sector to ensure the reformed full expensing policy meets the investment needs of the modern business.”
Meanwhile, Mike Thompson, chief operating officer at Leasing Options, highlighted how the extension of the fuel duty freeze was a “positive development” for drivers, the motoring industry, and the broader economy.
“We welcome this decision and look forward to continuing to support our customers with flexible leasing options,” he said.
Select Car Leasing’s MD, Graham Conway, also welcomed the freeze on fuel duty. “We wholly welcome the Chancellor’s decision to extend the freeze on fuel duty,” he said.
“It’s an announcement that brings at least some comfort to drivers who have already seen unprecedented rises in their car insurance premiums, while they’re also having to cover the cost of vehicle repairs caused by the decrepit state of the UK’s potholed roads.”
He added: “It’s worth noting, however, that although the fuel duty freeze spells financial relief for millions of drivers, petrol and diesel prices can still be a huge burden for many families and businesses.”
David Savage, vice president of Geotab for the UK and Ireland, says that fuel duty is one of the most significant contributors to operating costs for fleets and drivers.
“Fleets are under significant pressure to optimise operating costs and drive efficiencies wherever possible—and with fuel duty typically making up around a third of the overall cost at the pump, the scheduled 5p increase for later this month only risked exacerbating these pressures further,” he said.
However, with no new measures to drive the electric vehicle market, Savage added: “For those that rely on charging their EVs on public networks, the costs are often disproportionately much higher and increasingly even more expensive than refuelling traditional internal combustion engine vehicles.
“It’s important for the Government to consider ways to stimulate the market and boost enthusiasm for EV adoption at scale.”
QBE’s director of underwriting, Jon Dye, believes the fuel duty freeze will lower inflation, helping motorists at the pumps, and importantly provide support to fleet operators as they battle to reduce overheads while transitioning to EVs to meet Government green targets.
“February saw the highest fuel prices in five months and despite prices continuing to increase, this Government decision will allow fleet operators across the UK to continue investing where it matters; in leading the transition to EVs and in securing UK supply chains,” he said.
Matas Buzelis, car expert at vehicle history checking service CarVertical, added: “Drivers are still waiting to find out when the Government’s Pumpwatch scheme might launch.
“This would provide much-needed transparency over the price of fuel at pumps all over the country.
“By using the real-time data, motorists will be able to find the best deals local to them to make savings, while increased competition should bring prices down.”
However, Ken McMeikan, CEO of Moto Hospitality, says it’s disappointing that the Chancellor did not go further and introduce a VAT reduction on public charging for electric cars, something many in the industry have been calling for.
“This is a missed opportunity to make significant strides with EV adoption as it would incentivise more people to make the switch to electric cars,” he said.
“Exempting public charging from VAT ensures that transitioning to EVs is more financially accessible to everyone.
“Encouraging motorists to switch to electric cars will be key if we are to achieve our goals as a nation of decarbonising over the coming decade and the Government has a major role to play in making this possible.”
Freenow UK’s general manager, Mariusz Zabrocki, says that while he welcomed the decision to extend the freeze to the fuel duty, he again called for a reduction in the VAT levied against on-street charge-points to 5% so that it is at the same level as the rate applicable to home charging.
“It’s unfair that drivers have to pay higher VAT than private users,” he added.
Thom Groot, CEO of The Electric Car Scheme, said: “The continuation of the freeze on fuel duty is nothing more than a fossil fuel subsidy worth billions of pounds a year, funds that could be far better spent on encouraging the uptake of electric cars.
“The flip-flopping and inconsistent policies over the last few years have led to confusion for the UK public, and dramatically slowed the uptake of electric cars.”
Charlie Jardine, CEO of EO Charging, was also disappointed not to see help for the sector.
“Stagnating sales of private EVs in the UK underscores the need for the Government to prioritise policies and investments to encourage mass market adoption of EVs, and the UK risks falling behind its global peers if it does not take measures to help drive uptake,” he said.
“Many Governments worldwide have introduced policies and incentives to encourage EV adoption. As well as tax incentives, these include subsidies for purchasing electric buses, grants for building charging infrastructure and mandates for transitioning to zero-emission fleets.
“However, there is a widespread perception that EV incentives primarily benefit affluent private EV owners.
“To ensure equal access to electric vehicles, the Government should also consider measures that benefit a wider cross-section of the public, for example grants for charging infrastructure and mandates for zero-emission bus fleets.
“This would help support those on lower incomes who may not be able to own an EV, but who should not be missing out on the environmental and health benefits of electrification.”
Peter Golding, managing director of FleetCheck, told Fleet News: “There was very little in there for businesses of any kind and especially for those operating fleets, except for the ongoing fuel duty reduction freeze.
“It really does feel as though our sector is now waiting for what now seems a likely change of Government, and the opportunity to engage the new administration in dialogue about what we would like to see from them in terms of future developments in all kinds of areas from electrification to driverless cars.”
Ben Thompson, managing director of EV and energy at Radius, welcomed £270 million in funding to support British advanced manufacturing of zero emission vehicles.
“EV adoption is happening now,” he said. “While investment in the manufacturing of EVs is a positive step forward, we need to see further investment in UK-wide EV charging infrastructure.
“With enough support, consumers and businesses alike can continue to embrace sustainable vehicle adoption to help us reach the all-important net-zero targets.”
Adam Hall, director at Drax Electric Vehicles, believes that the Budget missed significant policies to help fleets, drivers, and businesses.
“The Chancellor’s announcement of a continued fuel duty reduction for the next year didn’t shock many of us. With the need to curb inflation, it has remained a crucial tool since its introduction.
“However, businesses and drivers will be disappointed to hear that the Chancellor hasn’t listened to calls for public charging VAT cuts.
“Decreasing from 20% to 5% would’ve been a helpful step in the right direction for current and soon-to-be EV owners.
“We would have liked to see this support from the government to increase the affordability of EV charging across the UK, especially for those who can’t plug in at home or don’t have access to charging facilities at work.”
In terms of electric vans, Hall argues that operators need “critical support” to meet the 2030 ZEV target for vans, which is currently 70%.
“Additional barriers must be addressed for fleets to confidently move away from the comfort of petrol/diesel vans,” he said.
“A considerable part of the electrification process relies on workplace charging, so measures to ease the installation process are essential.”
Philip Nothard, chair of the Vehicle Remarketing Association (VRA) wanted to see measures to help the used car market as it moves to electrification.
“There are clearly issues with levels of demand and residual values that need to be resolved as supply of EVs into the sector continues to rise quite rapidly,” he said.
“There are a range of possible solutions that have proven successful in other countries – from zero interest loans to subsidies. Unfortunately, there was nothing forthcoming in this area and this was a Budget that was very much about the politics of the forthcoming general election.”
However, James Tew, CEO of iVendi, says that, with the used car market in reasonably strong health and yesterday’s figures showing that the new car market had its best February for 20 years, it was unlikely that the Government was ever going to provide any new forms of support for the sector.
He said: “While the reduction in National Insurance might make a few people more likely to swap their car, the truth is that we appear to be in the middle of a long period when growth is flatlining, and general consumer and economic confidence is similarly, largely in check.
“Whether the general election later this year will start to change that situation and bring a degree of optimism is an unknown.”
Barney Goffer, UK product manager at Teletrac Navman UK, says that, while the Chancellor promised ‘more investment, more growth and better taxes’, the Budget is missing some vital elements for fleets despite a welcome freeze to fuel duty for another 12 months.
“The Budget could have been more focused on helping work towards the bigger decarbonisation story and its associated costs,” he said.
“The lack of reduction on VAT for public EV charging points was a surprise; this will have a particular impact on smaller fleets who rely on public charging for their operation. So while they’ve made the commendable step to decarbonise their fleet, they’re being stung in other areas of expenditure.
“Additionally, it would have been good to see more incentives introduced for medium to large fleets, to help them scale up their transition and reach their targets quicker.
“Switching vehicles and installing on-site charging infrastructure are big investments and without government incentives to help scale them up, businesses are likely to struggle to make the switch.”
