Government changes – strategic newsletter

04 January


Freezing fuel duty:

In the 2017 Autumn Budget, Phillip Hammond announced that fuel duty will remain frozen at 57.95p for the eighth year in a row, saving drivers £160 a year on average. Cancelling April's planned rise, Philip Hammond said: "Since 2010, we will have saved the average car driver £850, and the average van driver over £2,100, compared to Labour’s escalator plans."

Some opposition to the move retaliated, expressing how disappointed they were that the Government did not go further. Peter Williams, head of external affairs at the RAC, explained, "Drivers already contribute more than £27bn a year to the Treasury from fuel duty receipts, and we’d have liked to see the Chancellor commit to no further rises this parliament."

Others were critical against the decision in terms of its environmental impact, explaining how it undermined the Government’s commitments to cleaner air and sustainable energy.

Incentive for the future:

80% of nitrogen dioxide emissions are produced by road transport. Even new diesel vehicles create significant emissions; a test in 2016 showed that the 50-bestselling diesel cars, on average, emitted over six times more nitrogen dioxide in real-world driving than current emission standards allow.

The money will support the National Air Quality Plan as the government will put the money raised towards paying for a new £220m Clean Air Fund. This new fund will enhance the £255m funding the plan set out with in July, taking the total amount invested in air quality and cleaner transport since 2010 to £3.2bn.

To encourage the next-generation of clean diesel cars to get on to the market quicker, the Government has introduced a temporary levy on diesel cars from April 2018. New diesel cars will go up one Vehicle Excise Duty (VED) band in their first-year rate, and the existing Company Car Tax diesel supplement will increase by 1%. However, these charges will not apply to next-generation clean diesel cars that meet the Real Driving Emissions Step 2 standards (which come into effect properly in 2020).

HGV, van, and petrol or ULEV car owners will be unaffected by these changes. As will those who have already bought a diesel car. However, they will still benefit from the frozen fuel duty. The latter will benefit motorists by over £4 billion over the next 5 years – nearly nine times more than the amount diesel taxation will raise for air quality.

Meanwhile, an extra £100 million will go towards helping people buy battery electric cars. The government will also make sure all new homes are built with the right cables for electric car charge points.

It’s all about ratios:

Biofuel, whether it’s made from used cooking oil, vegetable oils or grease, is usually blended with normal fuel, like diesel, to make up a percentage of the whole fuel product. Since September, 2017, Industry experts have been waiting to hear from the Government, who are expected to publish long-awaited proposals relating to this renewable fuel.

The main reason for this apprehension is that the transport fuel mix is set to move from 4.75% to 7.25%, with the proposals increasing the amount of renewable fuel into the mix by 2020. While it’s expected the Government will hold at this percentage until 2030, this could mean a price increase to fuel costs.

The move has come because transport is now the most carbon-polluting sector in the UK economy and renewable fuels will propel the Government to meet its decarbonisation ambitions for the 2020’s and 2030’s.

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