Response to the UK Government’s ‘Mini-Budget’

On Friday, 23rd September 2022, the new Chancellor of the Exchequer, The Rt Hon Kwasi Kwarteng published his 'mini-budget' to address the current national financial situation and mitigate the 'fuel-crisis' and the cost-of-living crisis. Following his statement, fleet professionals expressed their opinion on how well they thought the measures published would address the issues facing the country's transport, logistics and fleet industry. We have published and reasonable sample of the comments, both positive and negative below.

Matthew Walters, Head of Consultancy Services and Customer Value at LeasePlan UK, said: On the economic situation: "This was called a Mini-Budget, but, in truth, its contents were pretty big.

With a 1p cut to Income Tax next year and the abolition of the additional rate altogether, the new Prime Minister and her Chancellor have made a clear statement about how they intend to govern the economy. "But the challenges facing the economy are big, too. The ongoing effects of Brexit, the pandemic, and now a cost of living crisis, mean that the UK faces a number of years of uncertainty and sluggish growth.

Even without the Office for Budget Responsibility's usual economic forecasts, we know that the situation is extremely worrying for many businesses and individuals. "We also know that the fleet industry is well placed to overcome these challenges, just as we have overcome similar challenges in the past. Not only did we account for half of all new car sales in 2021, but we are also leading the adoption of the cleaner motoring technologies that will define the future."

On the Health & Social Care Levy: "This is a money-saving measure for both employers and employees - although also, specifically, for fleet professionals. Because of the way the tax is calculated for cash allowances and company cars, with NICs forming part of the equation, fleets and their motorists stand to save, too.

"However, it ought to be noted that the Health & Social Care Levy was due to be removed from NICs in April, anyway - so this is only a temporary boon for fleets. "Separately, businesses should also pay attention to the scrapping of the much-disliked IR35 regulations. Under the new regime, which will take force in April, workers providing their services through an intermediary will, once again, be responsible for confirming their own employment status - rather than the liability sitting with the employer.

This could be another significant money-saver for companies and fleets."

Kwasi Kwarteng

Kwasi Kwarteng On Fuel Duty: "We were surprised that the Chancellor didn't choose to act on Fuel Duty today.

While it's true that petrol and diesel prices are lower than they were in the summer, they are still historically high overall - so motorists would have appreciated the extra relief of a Fuel Duty cut. "Then there is the unanswered question of what happens to Fuel Duty in the longer term. We have heard a lot of hints and speculation in recent years about a new tax regime to replace Fuel Duty, such as Road Pricing, as the revenues from petrol and diesel vehicles decline.

Yet nothing substantive has been done to help solve this multi-GBPbillion problem. "If we are all to prepare properly for an electric future, it's vital that the Government doesn't bury its head in the sand. Truss and Kwarteng need to engage with businesses, fleets and motorists about Fuel Duty's future - and soon."

On Company Car Tax rates: "This was a Mini-Budget, so we didn't expect it to contain all the detail that we - and fleets - want to see. But we do expect to see some of that detail in the next proper Budget.

"Top of our wish list are the new rates of Company Car Tax for 2025-26 and beyond. The previous Chancellor, Rishi Sunak, began his time in the Treasury by giving us ample warning of upcoming rates, but the numbers that he provided are now starting to age. Fleets and motorists entering into new contracts today are unlikely to know how much they'll be paying in CCT at the end.

"As much as tax cuts, the fleet industry thrives on tax transparency. Prime Minister Truss and Chancellor Kwarteng have to let us see as far into the future as possible." On other delayed legislation

"Again, this was a Mini-Budget, so we didn't expect too much from it. But, even so, some of the long waits for legislation are now, frankly, getting silly. "Where is the necessary detail on the ZEV Mandate for manufacturers, requiring them to sell a certain proportion of zero-emission vehicles, that was first proposed and consulted on in summer last year?

Where is the new system of VED for vans that was first mooted in 2018? Where is HMRC's work on how we can, to quote Rishi Sunak in 2020, 'use VED to further encourage the uptake of zero and ultra-low emission cars'? "We could go on.

Even outside of the Treasury's red books, we're still waiting for the new public charging rules - so well designed by various government departments, and so desperately needed - to be actually introduced. "Prime Minister Truss says that she is all about delivery. If that is true, then she needs to deliver on this lengthening backlog."

SMMT Chief Executive, said: "The Chancellor's Growth Plan opens the door towards an automotive recovery with encouragement for investment and tax cuts designed to rebuild consumer confidence. We look forward to further action in the months ahead to tackle wider, long-term reform to enhance the automotive industry's international competitiveness, including a review on business rates, tackling long term energy costs and encouraging investment in new skills - enabling the sector to deliver growth in trade, jobs, and decarbonisation." Gordon Balmer, Executive Director of the Petrol Retailers Association said: "Our members are extremely worried about soaring energy costs. While we are encouraged by the Government's recognition of this issue through the Energy Bill Relief Scheme, we are concerned that it will not be enough to mitigate the long-term effects of price increases."

Earlier this month, Prime Minister Liz Truss announced a cap to energy costs to help businesses with soaring energy bills for a six-month period, starting on October 1. "I would urge the Government to extend the six months of support to a year for forecourts as they are essential to the functioning of the UK's economy. This will give relief to our members and lower the chances of forecourts closures, which could be devastating for many communities who rely on the fuel and food they supply."

Gordon Balmer urged to extend Government support in the form of the energy price cap to forecourts to a year, with the option to renew for an additional year. Balmer concluded: "By extending relief, the Government can ensure fuel resilience and give the energy market time to stabilise." Chancellor Kwasi Kwarteng has announced that from November 6 a 1.25% rise in National Insurance will be reversed.
Additionally, it was revealed that the corporation tax rise was cancelled, keeping it at 19% rather than increasing to 25%.

"The reversal of the National Insurance contribution and the corporation tax hike are welcomed by the PRA. This will help our members during these critical times. A few days ago, PRA wrote to the Chancellor of the Exchequer urging government's intervention to support forecourts businesses."

In a further move to grow the economy, the Chancellor announced plans to accelerate new roads and rail.
New legislation will cut barriers and restrictions, making it quicker to plan and build new roads. "The promise to accelerate infrastructure projects is applauded by the PRA. Forecourts around the UK will benefit from an upgraded road system, and it will help deliver a high-growth economy in the future.'

Balmer concluded "We are however deeply disappointed in the Government's failure to address the business rate that is due to expire in April 2023. The rising bills had a huge impact on businesses and the discount has been of crucial support for our members. Jon Lawes, Managing Director, Novuna Vehicle Solutions comments: "The headline grabbing support for businesses is a welcome boost for the industry.

However, despite announcing an intent to accelerate charging infrastructure, no clear plans were laid out to provide new impetus towards the Government's 2030 targets. "The number of electric vehicles on the roads continues to markedly eclipse chargepoint installations, illustrating the necessity for swift action under the new administration. "Additionally, the discrepancy in VAT on domestic versus public charging threatens to undermine momentum towards EVs.

In light of current electricity costs, it was disappointing not to see a VAT reduction introduced within today's announcements." David Savage, Vice President, UK and Ireland, Geotab, said: "We're encouraged to see the plans to accelerate a number of key infrastructure projects, including the Local EV Infrastructure Fund and the Rapid Charging Fund. Chancellor Kwasi Kwarteng's mini-budget is an encouraging shift in the right direction, particularly with the looming 2030 stop sell date for Internal Combustion Engine (ICE) vehicles.

"Earlier this year, Geotab's Destination EV - Accelerating Local Authority report found an alarming lack of local investment and awareness regarding EV transition. Most notably it found that nearly half of English local authorities were unprepared for the switch to EVs amongst their own fleets. "Local authorities specifically cited limited resources and concerns around charging infrastructure as key inhibitors for EV adoption.

This transition needs investment to support local authorities across the country. "However, there remains a clear need to encourage and accelerate EV adoption. We announced just this week that over half of light-duty fleet vehicles in Europe could save nearly GBP218m simply by switching to electric today.

However, the UK's termination of the plug-in car grant earlier this year has demonstrably stifled the economic viability of this transition. As such, we hope to see more focused investment and support from the government to accelerate the shift to electric ahead of its 2050 net zero ambitions." David Bushnell, Director of Consultancy and Strategy, Fleet Operations: "The Chancellor's announcement of significant tax cuts in his mini-budget will help support business growth and will be welcomed by the UK plc, at a time of burgeoning cost pressures and economic volatility.

"Kwasi Kwarteng's decision to permanently keep the annual investment allowance at GBP1 million is notably reassuring for fleets planning to invest in new technology and charging infrastructure. "The decision to freeze Corporation Tax at 19% - for the financial year beginning April 1, 2023 - is also welcomed, but the impact of this must now be factored into fleet budget plans and cost projections. Corporation tax relief on the increased rate of up to 25% would ultimately have led to a reduction in fleet TCO (total cost of ownership).

"While the energy price cap for domestic households will help encourage the adoption of electric vehicles, the Energy Bill Relief Scheme for businesses will hopefully lead to a reversal of the rapid increase in the cost of public charging - giving further confidence to the EV market. It would have been good if the VAT had been recued to the 5% charged on domestic energy. "Fleets are at the forefront of the electrification of transport and many businesses are increasingly having to rely on public infrastructure as they strive to optimise charging strategies and service delivery.

"Over the coming months, we hope to see further action from government that will help accelerate fleet transport decarbonisation and the road to zero." Peter Denham, VP, Europe and Africa, Airswift. "The alterations to the IR35 were absolutely vital to ensure growth within the UK! The government's done the right thing and removed a burden for companies trying to solve an unnecessary and difficult puzzle every time they make a hire.

With thousands of energy contractors and freelancers having faced excessive complexity and a significant reduction in their take home pay as a result of this reform, today's announcement can only be, and certainly is, positive news for the workforce." Tom Williams, Partner and Head of Energy and Infrastructure at Downing LLP, said: "We have long advocated planning reform to accelerate the deployment of renewables. The steps that the government is taking to achieve this are very welcome, but it must focus its efforts beyond just wind power - solar and hydro are also essential elements of the energy mix and are needed to ensure that UK power generation from renewables is as reliable as possible.

Policy around energy storage and transmission also needs to be prioritised and is key in helping to shift the UK's energy dependency away from fossil fuels and help support the country's ambitions in becoming energy self-sufficient." Andre Dias, CTO and Founder of Daloop: "Without confidence in related infrastructure and supporting services, the anxiety amongst enterprises and individuals to switch to Electric Vehicles (EVs) will continue. Today's Which? survey results indicate that improvements must be made to the EV charging network.

To safeguard the mass transition to EVs, we need to ensure the infrastructure, management tools, and ancillary services are all in place to provide a smooth and cost-effective transition towards a decarbonised transport network. It is crucial that consumers feel confident that they can charge their vehicle when needed, especially as range anxiety is continually seen as an obstacle to those purchasing an EV. Therefore, to reduce this anxiety, it is essential that charging operators provide a reliable service and offer a simplified payment system that will increase EV accessibility.

For fleet operators and businesses looking to switch to sustainable mobility, it is imperative to combine investments into EVs with intelligent, data driven management software. This will allow for a smoother charging experience and allow fleet managers and drivers to view and reserve available charge points ahead of schedule - increasing confidence in the ability to re-charge on long-distance trips and reducing charging anxiety." Jai Kanwar, Co-Founder and Joint Managing Director, Zeus, said: "It is hugely disappointing that today's emergency Mini Budget did little to address the pressing issues facing our owner-operator and small haulage firms, who have been left crippled by the recent economic problems.

The road freight industry is an essential underpinning of our consumer economy. Many smaller fleets, owner-operators, which make up almost 70% of UK registered haulage firms, are unable to continue operating properly under the current cost-of-living crisis and this year's record fuel prices. "Much of this crisis can be traced back to our dependence on imported fuels.

While short-term relief is key, longer-term support needs to come under the umbrella of energy reform and embracing more sustainable freight fuels such as hydrogen and electric vehicles. For too long, we have been too dependent on others, which makes the UK's economy more susceptible to geopolitical instability. There is an opportunity to rapidly implement the promised GBP450 million Local EV Infrastructure Fund from the Office for Zero Emission Vehicles to help increase the uptake of e-HGVs.

This would make the UK's freight self-reliant through domestically produced, sustainable, and cleaner energy sources - namely encouraging the use of electric heavy goods vehicles for long-haul runs powered by our national grid. This action would help us avoid long-term economic hardship by keeping the flow of goods, raw materials and produce on the move. "We remain cautiously optimistic that Anne-Marie Trevelyan, the former Minister for Energy, Clean Growth and Climate Change, has been appointed as the new Secretary of State for Transport.

However, waiting to fix the ongoing challenges until the Autumn Budget will already be too late for many owner-operator and small haulage firms, so action will need to be taken much sooner to mitigate the damage to our supply chain industry. Zeus hopes that the Government's true intention will become clearer once we see whether they plan to progress the Local EV Infrastructure Fund. This legislation and accompanying national fund will be pivotal to any economic growth strategy."

Crawford Temple, CEO of Professional Passport, the UK's largest independent assessor of payment intermediary compliance said: "Pressing ahead with the Off-payroll legislation in 2017 and 2021 was foolhardy as the government was building new legislation on fundamentally flawed original legislation as most experts highlighted at the time. "Moreover, the legislation opened the floodgates to disguised remuneration schemes, once again highlighted by experts, that have had a punitive impact on contractors' pockets whilst the perpetrators of the schemes have financially flourished. Implementation of these new rules has cost companies millions of pounds so it is disappointing that the warnings were not heeded before pressing ahead.  Implementing Off-payroll has created a car crash and much damage has already been done.

"It has taken up until now for the government to acknowledge this.

However, the government urgently needs to press HMRC to provide detailed guidance, on the back of today's announcement, relating to the application of the MSC Legislation.

"I would go further and suggest a review of both IR35 and MSC Legislation needs to be carried out urgently so that contractors are not inadvertently operating under schemes that would apply full PAYE to their income from April.  IR35 is flawed and the government should start with a clean sheet of paper and design a strategy for the modern workplace."