What the Fleet industry wants from the Budget, and what it doesn’t
With Chancellor George Osbourne set to reveal the gritty details of his much-anticipated Budget tomorrow, FleetDirectory.co.uk quizzed a few fleet professionals on what they would like to see come out of that battered little briefcase, and just as importantly, what they wouldn’t.
Needless to say, pump prices and controlling fuel duty were hot topics, popping up with nearly everyone we spoke to, but with encouraging signs emerging from the powers-that-be in the past week, maybe their wishes could come true.
Here’s what they had to say…
Martin Brown, MD at Fleet Alliance, reckons the Government should remove the 3% Benefit-in-Kind taxation surcharge that diesels cars are currently faced with.
Citing the improvement in diesel technologies in recent years, he argued: “There is no longer any justifiable reason that diesel cars should be penalised by an extra 3%, when in fact they are very low carbon emitters and modern technologies have done much to remove or reduce particulates.”
Brown also called for the introduction of a fuel stabiliser to control rising pump prices.
“I think the Government must re-look at its plans for fuel duty against a backdrop of rising fuel costs and VAT increases which are a considerable fiscal drag on the economic recovery. A mechanism to control rising prices would be very welcome across all industry sectors,” he said.
Martin added that he felt measures to quash the size of the Government deficit had been “too deep, too quickly”.
Neil Greig, Director of Policy and Research with the IAM, also believes moves to control the deficit have been too severe and said areas like the Department of Transport and public spending on roads and police should not have to suffer any further cuts.
“Like everybody else, we are very much hoping the decision to postpone the 1p rise in fuel duty goes ahead,” he said.
“From an IAM corporate perspective, we would not want to see any changes to the tax regime for charities. I think some safety items such as motorcycle helmets and child seats don’t attract so much VAT so we would not want to see that changed.”
Tony Hulatt, MD at independent fleet management specialist CLM, says that if he were Chancellor he would reduce bureaucracy by scraping the need for UK fleets to upload their vehicle details to the Motor Insurance Database (MID).
“Fleets are insured under global policies, not on a vehicle by vehicle basis, and this is a totally unnecessary measure,” he explained.
“It is one designed from a retail perspective, but has little fleet application and is a completely unnecessary piece of administration.”
Acknowledging that it is not strictly something within the Chancellor’s control, Tony would increase penalties for drivers who use mobile phones to six points and a £1,000 fine.
“Every day, you to see people flouting the law in this area and I think we need a much stiffer deterrent than we have now,” he bemoaned. “Handheld mobiles have been shown without question to be a major cause of road accidents in this country.”
Roddy Graham, Commercial Director of the Leasedrive Velo Group and Chairman of the Institute of Car Fleet Management, would like more money spent on proper road maintenance and engineering as part of a greater investment in an integrated transport infrastructure.
“The appalling condition of our roads is not just due to the last winter but monies from road tax, fuel duty, etc being siphoned off into other departments,” commented Roddy.
“Our transport infrastructure needs a lot more well planned investment to keep UK PLC on the move. An extra £100m to fill potholes is a drop in the ocean.”
So what’s the one thing Roddy wouldn’t want to see included?
“The Fuel Duty hike planned for April.” Of course.
“We need lower and more stable prices at the pumps or else in the not too distant future fuel will overtake depreciation as the highest fleet cost,” he added. “We need the cost at the pumps to better reflect wholesale prices.”
Nick Hardy, sales and marketing director with Ogilvie Fleet, would welcome any significant movement to get a grip on the increasing cost of fuel.
“I would like to see a stabiliser system or other route whereby we don’t face the uncertainty of increasingly crippling costs of fuel,” he said.
Mr Hardy also wanted to see the exclusion of the 3% diesel surcharge: “It’s about time that there was parity between petrol and diesel and that choices were made on an equal footing regardless of the fuel type.”
Rob Pilkington, MD of the Leaselink International division of Oxford-based online solutions provider, Ebbon-Dacs, would introduce a scheme to give unemployed people essential work experience that would also help essential industries compete in a tough economic climate.
“My scheme would be designed to help boost UK manufacturing and service businesses by utilising the resources of the able bodied, longer term unemployed. Benefit payments would be linked to some form of requirement to participate in the scheme,” he explained.
“The goal would be to give the long-term unemployed vital work experience, but at the same time, helping businesses compete in a very competitive global market in what are challenging economic times.”
Rob believes abolishing the automatic fuel rise accumulator would boost the fleet industry.
“We urgently need a new scheme that balances fuel duty with global oil prices, because at the moment our fuel prices are too high, and unsustainably high for many businesses in Britain without causing extreme pain and damaging economic recovery,” he said.
“I would like to see the removal of the additional tax surcharge that penalises diesel drivers. These lower CO2 emitting vehicles are key to mobility in the fleet sector, and helping economic recovery, and it is iniquitous that they, and their drivers, are penalised in this way.”
Julie Jenner, chairman of the Association of Car Fleet Operators (ACFO), would like to see company car benefit-in-kind tax rates for 2013/14 and ideally 2014/15 too.
“Rates are known for the next two financial years but employees now deciding on their next company cars remain in the dark as to how much their tax bill will be from April 6, 2013,” she explained.
“In the last decade, successive Governments announced company car tax benefit-in-kind rates on a three-year cycle so drivers knew where they stood for at least the majority of their use of the vehicle.
“It is now a concern that employees are taking delivery of new cars now and have no idea of how much tax they will be paying on a vehicle they will still be driving in 2013/14. Additionally, with some company cars now being driven into a fourth year it would be helpful if rates were announced on a four-year cycle.
Julie would also remove the 3% Benefit-in-Kind taxation surcharge that applies to all diesel cars.
“As diesel cars have lower CO2 emissions than equivalent petrol engine models drivers should not be financially penalised for selecting them,” she added.
Roger Smith, head of the UK arm of leading global fleet software supplier, Sofico, wants the Government to seriously consider the introduction of a fuel duty stabiliser too.
“We have the second highest fuel prices in Europe and pay the highest proportion in duty,” he said. “This is a major obstacle for many companies battling their way out of recession. A stabiliser as described would help fleet operators enormously as it would stabilise pump prices and allow more accurate budgeting and cost reporting.”
The physical disappearance of the tax disc would also bring an end to an unnecessary administrative burden on the fleet industry, Roger added.
“This is a vestigial piece of motoring history that generates unnecessary paper-based processes and additional administration for leasing companies and other major fleet users. The process of sending out discs and cashing in discs on sold vehicles is very laborious and time-consuming.
“There is now reason why, using appropriate fleet management software, we could not simply update computer files and link these back to the DVLA to confirm renewal of the licence.”
David Brockwell, Finance Director at leasing and salary sacrifice specialist Tusker, would be content if there were just no surprises.
“We’ve had an unprecedented period of assault on the taxpayer, brought about by the banking crisis, with the motorist being hit as badly as any other sector if not more,” he said.
“Sustainability and stability should now follow, whereby the general public are not ‘taxed’ any more, whether that be at the petrol pump, IT rates, VAT or any other stealth taxes. Decisions can then be made with confidence on major lifestyle purchases, including cars.
“Presently, there is uncertainty in job security and disposable income and, therefore, any assurances or messages that ‘that’s it for the time being’ would go some way to alleviate that fear and help avoid that terrible phrase ‘double-dip recession’.
“The other area where the government can assist is in funding and providing some sort of incentive to provide vehicle funding at reasonable rates, other than to the bank-owned vehicle providers. If banks were incentivised to hit lending targets, we would see the creation of far more attractive financial products than the prohibitively expensive ones available at the moment.
“I would also like to see the abolition of the absurd Road Fund Licence paper-chase. If this form of road tax is to be continued, in this day and age of Automatic Number Plate Recognition, it must make more sense to dispense with the outdated issuance of tax discs and all the administrative burden that goes with it, and use technology to register whether vehicles are taxed or not.”
If Jason Francis, MD of Jaama, was to sneak one thing into the Budget, it would be a commitment on speed camera funding to wipe out cases of councils scrapping/switching off speed cameras because they cannot afford to run or renew them.
“No one likes speed cameras but there’s no doubt that they save lives,” he pleaded.
He added that the Chancellor should use the Budget to abolish the 1p a litre and inflation rise in fuel duty scheduled for April 1: “With inflation running in excess of 4% this could add 6p to the price of a litre of fuel.”
A fair fuel stabiliser is “imperative” for fleet business, believes Jakes de Kock, Sales and Marketing Director at The Fuelcard Company.
“The Government must commit to a sustainable strategy to benefit both us in the transport sector as well as the general public – it must not renege on its promises again,” he commented.
“The fleet industry has already been let down by the Government once, after plans for a perhaps mythical fair fuel stabiliser failed to materialise, so it is imperative it delivers on its promises this time, or there may well be strike action – and that’s the last thing this country needs.”
Jakes stressed that the fleet industry won’t be able sustain such levels of taxation with many smaller fleet companies already shutting up shop.
“We don’t want to see a reversal in the promise by the Government to start cutting corporation taxes,” he added.
“Businesses need all the help they can in this tough economic climate. Small businesses in particular have suffered in recent years because of the change in Government and the associated changes in tax rules. Yet small businesses add huge value to the UK economy, particularly in terms of stimulating and supporting economic growth, and the tax system should encourage this not discourage it.”
Do you agree with these views? Is there something you would like to see in the Budget? Speak your mind in the comments box below…
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