Government Budget Response

23 March


A few months on: our response to the Government Budget 

We were all watching the Chancellor of the Exchequer, Philip Hammond, on 22nd November as he stood before Parliament to deliver the Autumn Budget, 2017.

Hammond’s first set of financial plans were met with strong responses from business owners up and down the country and his November address has yielded a similarly passionate reaction from small and large companies alike – especially those with vehicle fleets.

Fuel and travel is often a focal point of any financial strategy, and several related announcements turned heads here at Allstar.

Fuel duty to be frozen

Business owners supplying company cars were understandably unsettled in the months leading up to the Budget, after rumblings of a fuel duty rise for both petrol and diesel.

However, because Hammond declared these proposed price hikes for April 2018 were to be scrapped entirely. Meaning businesses are able to stay worry-free over duty prices creeping up for the near future. With cancelled fuel duty increases, fleet operation costs will stay manageable and will remain financially viable for people to travel by car as opposed to public transport.

That said, further announcements revealed that some business owners would still be forced into making fleet changes.

Rising diesel road tax

Fuel duty might have remained constant (marking the longest freeze period in forty years) but any business with old diesel cars among its fleet may need to make adjustments regardless.

Diesel vehicles that do not meet “clean air” standards set out by the government are going to be slapped with an increased tax penalty, which forces companies to pay more to utilise these cars as part of a fleet.

Therefore, if you’re running old diesel cars, it might be time to consider an upgrade sooner rather than later. Vans, it is worth noting, are exempt from this law (for the time being).

Some backlash has arisen from this, as on 5th February, SMMT noted a 26% decline in new diesel sales, citing confusion in government policy as the reason for why buyers are hesitating. The problem is that many of these fleets will be holding on to older diesel cars that have higher NOx outputs.

New travel measures

The Autumn Budget publicised plans to invest in British transport as a whole. However, these developments are some way down the road.

Hammond referred to the completion of the HS2 rail network during his speech, but perhaps his most striking comment was concerning cars of the future. As the Chancellor noted, vehicles will eventually be driverless, but the short-term goal is to make them all electric. This will involve a £400m charging infrastructure grant, a £100m Plug-In-Car grant, and £40m in charging R&D.

This is already having an effect on fleet buying choices, according to the Hitachi Capital Vehicles Solution Future of Fuel Report December 2017. 62% of fleets now contain alternatively-fueled vehicles (AFVs) of some kind and 42% of fleets intend to add more AVFs to their ranks in the next two years.

It is inevitable that these changes will directly affect business owners’ long-term fleet plans, but until they take effect, the impact is minimal. More influential in the interim are frozen short- and long-haul economy rates on flights (paid for by increase in first class and private jet payments). 

Allstar: Keeping fleet costs down

The Autumn Budget offers good news overall for fleet managers, and with the Allstar card to hand, you’ll have the opportunity to cut back on fuel and company vehicle costs even further.

Browse our selection of cards or get in touch on 03334 144 896 to learn more about how you can use an Allstar card to save.

Share this article