Chancellor’s financial statement ‘disappointing’ for fleets

The Chancellor's summer economic plan introduced a range of measures to help the UK economy recover from the impact of the coronavirus.

The plan, revealed to the House of Commons yesterday (Wednesday, July 8), to protect jobs, help younger workers and encourage spending with measures such as a temporary VAT cut, from 20% to 5%, for the hospitality sector and a restaurant voucher scheme.

However, help for the fleet industry and wider automotive sector, including a potential scrappage scheme, was not forthcoming.

Paul Hollick, chairman of fleet representative body the Association of Fleet Professionals (AFP), said: “The Chancellor’s announcement was all about carefully targeted help for various sectors that are felt to be among the most vulnerable and it is disappointing that none of this support has found its way into areas that are likely to benefit fleets.

“This especially applies to low-carbon transport initiatives but there could also have potentially been aid for dealers, manufacturers and even fleet service support companies, all of which are facing specific problems.

“Given the fast-moving economic and infection situation, we don’t think this is the last time we’ll see him making announcements of this type over the next few months and we remain hopeful that we will be included in future programmes, an argument we’ll be making as an organisation.”

The automotive sector had been hoping for a scrappage scheme, offering money off a new car purchase.

Mike Hawes, chief executive at the Society of Motor Manufacturers and Traders (SMMT), welcomed the Chancellor’s plans to safeguard jobs and encourage consumer spending in some parts of the economy.

However, he said: “It’s bitterly disappointing the Chancellor has stopped short of supporting the restart of one of the UK’s most important employers and a driver of growth.

“The automotive sector has been particularly hard hit, with thousands of job losses already announced and many more at risk.

“Of Europe’s five biggest economies, Britain now stands alone in failing to provide any dedicated support for its automotive industry, a situation that will only deter future investment.

“We urgently need government to expand its strategy and introduce sector-specific measures for UK auto to support cash flow such as business rate holidays, tax cuts, and policies that provide broader support for consumer confidence and boost the big ticket spending that drives manufacturing. Until critical industries such as automotive recover, the UK economic recovery will be stuck in low gear.”

The Chancellor instead offered a 'job retention bonus' to encourage firms to retain furloughed staff. The one-off £1,000 payment will be made to employers for every furloughed employee retained to the end of January 2021.

It applies to workers earning over £520 per month, with the cost estimated at up to £9.4 billion.

There is a six-month VAT cut for restaurants, hotels and attractions, from 20% to 5% from July 15 to January 12, 2021.

Food and non-alcoholic drinks in restaurants, pubs and cafes, as well as hot takeaway food will be covered. Accommodation in hotels and B&Bs and admission to attractions such as theme parks and cinemas also affected

The threshold for stamp duty on residential property in England and Northern Ireland will also rise from £125,000 to £500,000. It applies from July 8 until March 31, 2021.

Energy efficiency grants for homes have also been introduced.

In addition, a ‘Eat Out to Help Out’ scheme offers 50% discount for every diner, up to £10 a head, from Monday to Wednesday throughout August.

Support for young workers is to be delivered through the ‘Kickstart scheme’ – a £2bn fund to pay for six-month work placements for 16 to 24-year-olds on universal credit – and grants for training young people.

In terms of infrastructure, more is expected in the Budget, while the Prime Minister, Boris Johnson, has earmarked £100 million for 29 road projects.

Nick Molho, executive director of the Aldersgate Group, said: “Beyond the need to commit public investment to support shovel ready projects and early stage innovation trials, it is critical that the Government puts forward a comprehensive policy plan in the autumn to drive private sector investment towards the low carbon and environmentally resilient infrastructure needed to put the UK on track for its net zero and nature restoration targets.

“Clear policy commitments in areas such as energy efficiency, clean transport and industrial decarbonisation will be vital if the private sector is to do a lot of the heavy lifting to build a competitive, jobs rich, low carbon economy.”