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What can motorists expect from the upcoming Budget?

The great question hovering over the upcoming Budget is this: how will George Osborne use it to appeal to voters ahead of the General Election? Will it be full of promising investments for our delectation? Or will it reassert the Iron Chancellor’s reputation for deficit reduction?

My guess is that Mr Osborne will do a little bit of both. After all, he is likely to have room for some giveaways: analysts reckon that, thanks to higher-than-expected growth and lower-than-expected inflation, the Chancellor could have an extra £8 billion to play with this year. But, with that election approaching, he won’t want to fuel the idea that his job is done and we can all vote for opposing parties.

Motorists will be used to this mixed approach from the last Autumn Statement. With one hand, Mr Osborne gave them £15 billion of renovations to Britain’s roads. With the other, he curbed their enthusiasm, with the investment coming after the election, over the next five years. As we observed at the time in our December blog, this makes the policy almost as uncertain as it is necessary:

‘For all their difficulties with white van drivers, it still looks more likely that Labour will triumph next May. And this possibility makes last week’s Autumn Statement more uncertain than any that have preceded it under the Coalition. That grand £15 billion plan for Britain’s roads? It could be done away with, or at least reshaped beyond recognition, in Chancellor Balls’s first Budget. Prime Minister Miliband might dare to resurrect the fuel price escalator.’

And the same goes for the forthcoming Budget. The Chancellor is now making policy for a time when his party may no longer be in Government.

Besides, what policies are there left for Mr Osborne to make? As far as motorists are concerned, the big roads announcement came with the Autumn Statement, as did confirmation that fuel duty would remain frozen for the duration of this Parliament, even though fuel prices have come down with the price of oil.

There could, however, be some activity around tax rates for the next Parliament – and those with company cars may be the victims. Last year’s Budget confirmed a two per cent increase in BIK tax for 2017-18 and 2018-19, with discounts for low emission cars. It will be worth keeping an eye on whether those rates stay the same in this year’s Budget, and whether the rate is higher still for 2019-20. On previous form, our Chancellor seems to regard company car drivers as a ready source of cash.

Aside from maximising tax revenues, another of Mr Osborne’s recent themes has been the devolution of power away from Westminster, and particularly to the north of England. In fact, in a recent interview with The Spectator, he described this as ‘the thing that I’m most passionate about’. So what will come of this passion? One think-tank has urged the Chancellor to announce a new Transport Commissioner for the North, with responsibility for some of the £15 billion’s worth of spending on railways and roads. In this vein, the Budget’s biggest policy could be one to leave the policy to others.

Or perhaps not. Mr Osborne is still thought to be hashing out his plans with council leaders from the North. Will they be ready in time for 18 March? Only the Budget document itself will tell. We shall report back as soon as we have a copy – if only to spare you the tedium of reading it yourselves.

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