HITACHI CAPITAL VEHICLE SOLUTIONS INITIAL COMMENT
Today, the Chancellor of the Exchequer, George Osborne, delivered his Summer Budget statement. It was the first all-Conservative Budget for almost twenty years and set out the Government’s plans for the economy for the next five years. Jon Lawes, Managing Director of Hitachi Capital Vehicle Solutions, commented on today’s announcements.
“It has been less than four months since the previous Budget Statement was delivered by George Osborne and the first all-Conservative Budget since Ken Clarke’s in 1996. Back in March, the Chancellor was under pressure to prove the Conservatives were the right party for the job ahead of the election. Today, we heard a budget that went further from the Chancellor which outlined the Government’s approach for the next five years.
“We were pleased to hear the Chancellor kept his word from the last Budget, announcing fuel duty will remain frozen for 2015. We also welcomed the introduction of the new Roads Fund to support the UK road network; however the method to feed this fund by the way of a new Vehicle Excise Duty will undoubtedly divide opinion.
“It was a question of when, not if, VED tax bands would change, with Mr Osborne himself citing ‘three quarters of new cars paying no VED by 2017’, a funding deficit that could not be ignored. We have expected changes to vehicle duty as we have seen with Benefit-in-Kind updates from previous Budgets, however it remains to be seen if the new simple three tier system announced today will reflect the distribution of new vehicle registrations in the market place. For businesses, this will be an additional cost to consider over the coming years, but the news these funds are going back into the roads will be welcomed.
“Similarly, the extension of the first compulsory MOT test from three to four years will have an impact for employers and employees alike. Although many company cars may now fall out of requiring a MOT while on fleet, employers will need to take additional measures to ensure they remain compliant and uphold Duty of Care obligations.
“At first glance, there was plenty of good news for both employers and employees. For businesses, the new apprenticeship levy will encourage the training of new staff, especially those aged 18 – 21 who have a new youth obligation to earn or learn. Reductions to Corporation Tax rates and the continuation of the Employment Allowance could encourage businesses to take on staff, who will be pleased to hear the minimum wage will increase to £9.00/hour by 2020 and rises in tax allowances.
“The opposition were quick to point out that Productivity had been downgraded by the Office of Budget Responsibility but did concede that they are willing to look at plans which seem sensible. Certainly, the cuts to welfare and changes in taxation systems all aim to cut the deficit and ultimately get Britain back in the black – albeit at a gentler pace.
“It may take some time for dust to settle on today’s Budget and whether this Government will deliver their ‘higher wage, lower tax, lower welfare’ society during George Osbourne’s time in office.”