News analysis Cold comfort
A continuing fuel duty freeze was the only real plus point for fleets from the Budget. Sean Keywood reports. F
uel duty will continue to be frozen at the current rate for the next 12 months, Chancellor of the Exchequer Jeremy Hunt announced in his latest Budget speech. The measure involves the maintaining of the freeze on fuel duty which has been in place since 2011, and also the continuation of the 5p cut which was introduced in March 2022.
It was the sole element of the Budget to have direct relevance from a car fleet point of view, although an announcement regarding the potential extension of full expensing to assets for leasing could have implications for commercial vehicle operators. And, while the fuel duty freeze was generally welcomed by the industry, there was general disappointment at a lack of new measures to encourage EV adoption. Fleet Operations director of consultancy and strategy David Bushnell 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.
“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.
“The government’s commitment to environmental sustainability and reducing carbon emissions is well- noted, but the actions to support these commitments, especially in the context of fleet transport, require more work.”
Cox Automotive insight director Philip Nothard said: “The budget will come as a disappointment to both current and would-be EV drivers and automotive generally. We had hoped that the government would address the VAT discrepancy between domestic and public charging. Steps taken in that regard would have been both affordable and logical.
“Having said that, measures that put money back in the pocket of the average consumer, as the fuel duty freeze and national insurance cut do, clearly help our sector. This was a budget designed to win votes in an election year, but one with zero incentives to further push zero- emission motoring.”
Association of Fleet Professionals chair Paul Hollick said: “There are some mixed feelings here. In a lot of ways, one of the wins this government can claim over the last 14 years is its commitment to electrification, and the impact that its
“The budget will come as a disappointment to both current and would-be EV drivers.”
policies have had on the fleet sector in terms of moving to zero carbon emissions have been marked and dramatic. “However, the truth is that more assistance in this area is now required – especially when it comes to van electrification where there are fundamental issues to overcome as well the need for a further increased rollout of charging infrastructure – and there was no sign of that help arriving at any time soon.
“While minor moves such as the continued reduction of fuel duty are welcome, we very much hope to see more from whoever is in power following the next General Election.”
BVRLA chief executive Gerry Keaney – although welcoming the full expensing announcement applicable to CV fleets – said: “At a critical time for the transition to zero-emission vehicles, no news is bad news. Today we heard nothing on charging, VED, BIK, VAT on public charging, grants for electric vans, or a consumer education campaign. The Chancellor is leaving our sector in limbo. “The government needs to be braver in unlocking the billions of pounds in zero- emission investments required across the whole road transport sector, from fleets, small businesses and private motorists.”
www.businesscar.co.uk | March 2024 | 5
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