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Chancellor Philip Hammond

Budget 2018: key points for motorists and how the industry reacted

Chancellor Philip Hammond

Chancellor Philip Hammond has announced what’s described as the biggest ever cash injection for England’s major roads in the 2018 Budget.

The flagship £28.8 billion National Roads Fund upgrade plan will run from 2020-2025, and forms the major part of a £25.3 billion budget for Highways England, called Roads Investment Strategy 2.

This is a 40 percent increase on the previous five-year plan’s £17.6 billion (dubbed Roads Investment Strategy 1) – and it will be raised largely from ring-fencing Vehicle Excise Duty (VED). This was announced in the 2015 Budget by then chancellor George Osborne, following claims only 25p in every £1 raised from VED was being spent on roads.

The government also announced £3.5 billion of ‘new money’. This will be used by local councils to upgrade major local roads that fall outside the control of Highways England.

Another £150 million will be provided to improve problematic road junctions and congestion hotspots, benefitting all road users, not just motorists.

The UK’s pothole scourge was addressed in the 2018 Budget with an extra £420 million for road repairs. This is on top of a previous £300 million pothole fund (although the Asphalt Industry Alliance says to fix all England’s potholes would actually cost £8 billion).

The Chancellor said the £420 million sum “will be available immediately, to local highway authorities, for fixing potholes, bridge repairs and other minor repairs”. 

There’s also a £680 million commitment to supporting sustainable transport in cities – that’s buses, trams and cycling routes. From 2022, Future Mobility Zones will be created with £90 million from the Transforming Cities Fund. The Treasury says this will help “trial new transport modes, services, and digital payments and ticketing”. The West Midlands region alone will receive £20 million of it.

As earlier announced by Prime Minister Theresa May, fuel duty has been frozen for the ninth successive year. “This will keep the cost of fuel down for millions of drivers across the UK,” said the Chancellor, “saving people around £800 million this year alone.”

The saving to the average car driver will be more than £1,000, and for the average van driver, £2,500.

The tougher new WLTP fuel economy test has raised the CO2 emissions of many big-selling cars, with particular impact on company car tax. The government says it will review the impact of WLTP, both on VED and company car tax, in the spring.

Ahead of this, VED and company car fuel benefit charges will increase in line with RPI. 

The 2018 Budget also hinted that greater changes to motoring taxation are being considered. “Technology is changing many aspects of the economy – including the vehicles we drive – and the government is considering how the tax system will need to adapt to manage those changes.” Could this be an early indication of road pricing, perhaps?

2018 Budget for motorists: reaction  

SMMT

“There are some welcome announcements in the Budget,” said Society of Motor Manufacturers and Traders chief executive Mike Hawes, but “the automotive industry was looking for a stimulus to boost a flagging market. We wanted to see more incentives for consumers to purchase the latest, most environmentally friendly vehicles.

“The forthcoming review into the impact of WLTP on Vehicle Excise Duty and company car tax must, therefore, ensure that motorists buying the latest, cleanest cars are not unfairly penalised. Industry looks forward to working closely with government on this review to ensure we encourage the newest, cleanest vehicles on to our roads rather than incentivising consumers and businesses to keep older vehicles going longer.”

RAC

“This is good news for the nation’s motorists,” said RAC chief engineer David Bizley. “While the focus of this cash injection is on strategic major roads, it is also positive that other local roads will benefit to some extent. But what is also needed going forward is a similar long-term strategy and funding for the maintenance and improvement of all local roads so that we can, over 10 years, eliminate the backlog.”

BVRLA

“The BVRLA was dismayed to hear that the Budget included no reference to an early introduction for the 2 percent company car tax rate for electric vehicles,” said chief executive Gerry Keaney. “The Chancellor chose to ignore the overwhelming voice of fleets, motoring groups, business organisations, environmental groups and MPs – all of whom were united in calling for this simple tax measure to support the electric vehicle market.

“The Government has missed a golden opportunity to incentivise the most important market for electric cars and is in danger of undermining its own Road to Zero strategy. “

Cox Automotive

Philip Nothard, customer insight and strategy director at automotive solutions provider Cox Automotive UK, said: “This was a very broad budget. We now need to have a real look into the detail and what it actually means for car owners.

“The freeze in fuel duty is obviously welcomed but there didn’t appear anything new, with no obvious references to challenges that the industry currently faces such as WLTP, autonomous vehicles and #dieselgate”.

Paul Johnson, IFS director

Labour MP Emily Thornberry

2018 Budget: cash for motorists

  • £28.8 billion: Roads Investment Fund (2020/25)
  • £420 million: local road maintenance (2018/19)
  • £150 million: tackling local congestion hotspots (£75 million in 2021/22 and the same in 2022/23)
  • £680 million: Transforming Cities fund (2022/23)
  • £90 million: Future Mobility Zones (2019/20 and 2021/22)
Chris Grayling Transport Secretary

Britain’s new transport secretary is Chris Grayling

Chris Grayling Transport SecretaryChris Grayling has been appointed Secretary of State for Transport by new Prime Minister Theresa May.

Grayling replaces Patrick McLoughlin, who becomes Conservative party chairman.

> More car news on Motoring Research

Formerly Leader of the House of Commons since the 2015 general election, Grayling supported the Leave campaign in the European Referendum. He also served as the Conservative shadow transport minister between 2005-2007.

Among Grayling’s more immediate transport decisions will be an announcement on airport expansion in the south east and further news on the HS2 rail project.

What should transport secretary Chris Grayling do?

The RAC’s Nick Lyes believes Grayling’s arrival could see a change in priorities – but hopes they don’t hit motorists in the pocket. “Motorists have in recent years benefitted from a prolonged fuel duty freeze and a focus on upgrading the strategic road network.

But what motorists need in this era of uncertainty is clarity that the Government will continue to be on their side. This means not increasing fuel duty and sticking with the long-term vision of investment for our strategic road network.”

With traffic volumes at record levels, the RAC wants assurances that Road Investment Strategy will be fully implemented and that long-term funding is found to fix Britain’s pothole-riddled roads (last year alone the RAC reported a 24% increase in pothole damage call-outs).

Indeed, “the state of our local roads is now so serious that motorists tell us that fixing the problem is their number one priority,” said Lyes.

“The Government will also have decisions to make about implementing clean air zones and improving road safety. Given the important part Britain’s 38 million motorists play in the country’s economic health, prioritising their needs is absolutely essential.”

Chris Grayling Transport Secretary

Britain's new transport secretary is Chris Grayling

Chris Grayling Transport SecretaryChris Grayling has been appointed Secretary of State for Transport by new Prime Minister Theresa May.

Grayling replaces Patrick McLoughlin, who becomes Conservative party chairman.

> More car news on Motoring Research

Formerly Leader of the House of Commons since the 2015 general election, Grayling supported the Leave campaign in the European Referendum. He also served as the Conservative shadow transport minister between 2005-2007.

Among Grayling’s more immediate transport decisions will be an announcement on airport expansion in the south east and further news on the HS2 rail project.

What should transport secretary Chris Grayling do?

The RAC’s Nick Lyes believes Grayling’s arrival could see a change in priorities – but hopes they don’t hit motorists in the pocket. “Motorists have in recent years benefitted from a prolonged fuel duty freeze and a focus on upgrading the strategic road network.

But what motorists need in this era of uncertainty is clarity that the Government will continue to be on their side. This means not increasing fuel duty and sticking with the long-term vision of investment for our strategic road network.”

With traffic volumes at record levels, the RAC wants assurances that Road Investment Strategy will be fully implemented and that long-term funding is found to fix Britain’s pothole-riddled roads (last year alone the RAC reported a 24% increase in pothole damage call-outs).

Indeed, “the state of our local roads is now so serious that motorists tell us that fixing the problem is their number one priority,” said Lyes.

“The Government will also have decisions to make about implementing clean air zones and improving road safety. Given the important part Britain’s 38 million motorists play in the country’s economic health, prioritising their needs is absolutely essential.”

Addison Lee autonomous car testing Oxbotica

Government asks Brits to help guide driverless cars

Autonomous drivingThe government is asking Britain’s motorists to have their say on how it should reform legislation to prepare for the roll-out of autonomous cars in the UK.

The consultation is open for the next nine weeks and is asking motorists for their views on two key pieces of legislation that need to change in order to accommodate autonomous cars:

  • The Highway Code, to account for remote control parking and motorway assist functionality
  • Car insurance law, to ensure motorists who have ‘handed control’ to self-driving cars will still be properly insured

Transport secretary Patrick McLoughlin wants Britain to be a global leader in embracing driverless car technology as it will “revolutionise the way we travel and deliver better journeys.

“Britain is leading the way but I want everyone to have the chance to have a say on how we embrace and use these technologies.”

The consolation is being launched now because the first wave of autonomous car technologies – so-called highly automated functionality – will start to become commonplace in the next few years.

This includes features such as remote control parking and motorway assist – similar to the Tesla autopilot function that drives the car and changes lanes on motorways.

The next stage is fully automated cars; the government believes these will start to launch in Britain from the mid-2020s. A key piece of legislation to resolve here surrounds car insurance; it will remain compulsory, even for ‘driverless’ cars, but will have extended cover for automated vehicle product liability.

In a nutshell, the government foresees car insurers paying out in the normal way but, if it’s the autonomous car that’s at fault, the insurer will then be able to claim back from the car manufacturer. The necessary changes will be introduced as part of the Modern Transport Bill, announced by the Queen in May.

Diesel pump

Diesel prices may go up as government mulls tax rises

Diesel pumpThe government is mulling tax rises for diesel in a move that would end the promotion of the fuel as a greener alternative to petrol.

Transport secretary Patrick McLoughlin has deemed the Labour government’s decision to cut fuel duty on low-sulphur diesel in 2001 a ‘mistake’ – because although diesel produces less CO2, it also produces significantly more NOx than petrol.

London T-Charge mooted for 2017

“It is something that we’ve got to address,” said the minister to the London Evening Standard.

“In fairness, they thought they were doing the right thing,” he said of the diesel promotion strategy. “The consequences of what they did was to bring about a reduction in carbon.”

But rising NOx levels in city centres – to levels that far breach official guidelines in parts of London – are seeing the government revise its air quality strategy.

Motorists ‘aghast’

The RAC has responded by saying motorists and businesses will be “aghast to hear the transport secretary hint at higher taxation levels for diesel vehicles.

“Many drivers and businesses have, in good faith, invested in diesel cars for this reason. What is more, diesel drivers contributed almost £17bn in fuel duty last year and already pay some of the highest diesel prices in Europe.

“There is no doubt that action is needed to improve air quality – however, by the Government’s own admission, this needs to be tackled at a local level.”

New London Mayor Sadiq Khan is already considering a ‘T-Charge’ that would impose an additional £12.50 charge on top of the London Congestion Charge on drivers of older diesels – that’s 2005 models or older. The scheme is apparently being accelerated for rollout in 2017.

The RAC’s Williams adds that “there must also be a concerted effort to clean up older, more polluting bus and taxi fleets in towns and cities.

“The Government can also not ignore the fact that congestion levels can exacerbate pollution levels and must consider measures that keep traffic moving.”

Toyota Mirai Hydrogen Fuel Cell

Fuel cell cars get £2 million government cash boost

Toyota Mirai Hydrogen Fuel CellThe UK government has launched a new Fuel Cell Electric Vehicle (FCEV) support scheme that it hopes will triple the number of hydrogen fuel cell cars in use on British roads in less than a year’s time.

The Office for Love Emission Vehicles (OLEV) scheme will offer fleets up to 75% off the cost of fuel cell electric vehicles, provided they emit zero tailpipe emissions.

As the first showroom-ready Toyota Mirai costs £66,000, that’s potentially a very significant saving indeed: it would take the Toyota’s price down to just £16,500.

Toyota Mirai review: 2015 first drive

Hyundai ix35 Fuel Cell: Two Minute Road Test

Production-ready Honda FCV fuel cell car debut at Tokyo Motor Show

The fund will also support the cost of running the cars for up to three years – and for fleets who’d rather lease than buy, support is extended to this too: a Mirai currently costs £750 a month, which could potentially fall to less than £190 under the government FCEV initiative.

Offered to both public and private sector vehicles, the government’s hoping it will allow local authorities, police forces and health trusts to add hydrogen fuel cell cars to their fleets – something today’s prohibitive costs makes impossible.

Transport Minister Andrew Jones said: “Hydrogen fuel cells are an important part of our vision for almost all cars and vans to be zero-emission by 2050.

“This funding, along with the growing network of hydrogen refuelling stations opening in England, will help businesses and the public sector to get on board with this exciting technology.” In 2014, the government investment £5 million to bring 12 hydrogen refuelling stations online in the UK: Jones today opened the second of these in Teddington, with all 12 due to open by the end of 2016.

The news was welcomed by RAC Business, whose spokesman Simon Peevers said: “Given the range of benefits that come with running zero and low emission vehicles in terms of running costs, there is certainly the will among businesses to make a change and realise those cost savings, if they can overcome the initial outlay.

“So it’s welcome that the Government recognises the importance of supporting fleets to encourage the transition to zero-emission vehicles.

“Within the wider context of the fleet sector it remains to be seen whether £2 million is enough to make a serious impact on encouraging businesses to upgrade their vehicles, but it is a step in the right direction as long as there is the infrastructure in place to support the new technology.”

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