Reaction to the 2016 budget

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FTA, SMMT and Campaign for Better Transport respond to the Chancellor’s budget announcement

Industry organisations have been responding to the 2016 Budget, which was revealed by Chancellor George Osborne on March 16.

The Fleet Transport Association (FTA) welcomed a freeze in fuel duty, but expressed disappointment that the tax was not reduced instead.

James Hookham, FTA Managing Director of Policy and Communications, said: “A further freeze of duties is welcome but the Chancellor missed a chance to give a boost to the stuttering economy by reducing the tax on an essential business input.”

As part of its pre-Budget submission, the FTA said that reducing road fuel duty would ease cost pressure on businesses operating commercial vehicles and stimulate economic growth.

FTA figures estimate that every penny of fuel duty costs commercial vehicle operators £120m a year.  

Also included in the FTA pre-Budget submission was the need to address a continued skills shortage in the transport industry and the importance of investing in infrastructure.

The FTA also welcomed news that tolls on the Severn bridges are to be halved, which it has described as ‘a step in the right direction.’

Tolls on the Severn River Crossings will be halved once the crossings are in public ownership, subject to public consultation. Alongside this, the government will also review the costs and benefits for developing a free-flow barrier-free tolling system.

The Severn Bridge tolls are the most expensive in the UK, costing £19.80 for a coach or lorry.

Ian Gallagher, FTA Head of Policy for the South West and Wales, said: “As always the devil is in the detail – the Chancellor has said that the tolls will be reduced when the bridges are in public ownership but this is subject to public consultation.  If the Government must consult, this should be carried out prior to handover so that a reduction in charges is in place from day one.

“FTA would urge the Government to look at starting the process of free-flow technology prior to the handover in 2018.

“Reducing the tolls will be a welcome shot in the arm for businesses and commuters who use the bridges daily, allowing businesses to invest in the things that matter such as new vehicles and staff recruitment.”

The bridges will revert back to public ownership in 2018. It is predicted that there is likely to be an outstanding debt of approximately £50m on the bridges at this time.

Mike Hawes, Society of Motor Manufacturers and Traders (SMMT) Chief Executive, also commented on the Budget.

He said: “The 2016 Budget contained some positive measures and we were pleased to see the Chancellor recognise SMMT’s call for greater support for energy efficient technologies, through both the extension of climate change agreements and a forthcoming consultation on the future company car tax treatment of ultra-low emission vehicles.

“However, we were disappointed that the Chancellor has not done more on business rate reform. The removal of plant and machinery from business rates valuation would have encouraged investment in innovative manufacturing technologies, improving still further UK automotive industry productivity and safeguarding our competitiveness.”

The Campaign for Better Transport welcomed major rail upgrades in the north of England, but highlighted further cuts to local transport budgets.

Stephen Joseph, Campaign for Better Transport’s Chief Executive, said: “The Chancellor claims to be ‘acting now so we don’t pay later’ but on transport he’s doing precisely the opposite.

“He has ducked the difficult decision on fuel tax and so done nothing to tackle the toxic pollution which kills tens of thousands each year. He’s hammered local transport like buses by cutting an essential source of revenue for local authorities, and he’s missed the opportunity to improve health by supporting cycling and walking.

“This coupled with more spending on big roads like the £6bn trans-Pennine tunnel means we’ll be paying for many years to come.

“The Chancellor’s refusal to raise fuel duty to reflect the true cost of motoring is short sighted. If the Government is really serious about tackling congestion and the UK’s appalling air pollution then it should be doing more to make local public transport a viable alternative to the car.

“The Chancellor has again taken the axe to local transport. By cutting the tax revenues local authorities will receive, vital transport spending on buses and filling pot holes risks being cut. With city devolution deals not yet up and running, this everyday transport will be left operating on a shoestring while millions continues to go on major infrastructure.”