Motor industry calls for clear statement on Euro in Budget

23 February 2001 #SMMT News

SMMT has urged Chancellor Gordon Brown to:

  • State clearly the position on the single currency and

    UK entry to the Euro

  • Broaden qualifying criteria for Climate Change Levy discounts

  • Ensure that costs of vehicle recycling are shared fairly

    by all stakeholders

  • Consult the industry on initiatives to reduce truck emissions
  • Give incentives to encourage R+D in the UK automotive


The motor industry today called for the Chancellor to clarify

the government’s position on the single currency in the Budget next week. It

comes at a time when the industry is facing an increased tax burden, with the

introduction of the Climate Change Levy, and shortly after a Trade and Industry

Select Committee report urged government to support UK motor manufacturers.

With no clear government position on the UK’s entry to the

Euro, manufacturers battle against high costs and an uncertain future. Sterling

remains strong and component suppliers in particular struggle to be competitive.

Eighty per cent of vehicles exported from the UK are destined for Europe and

fewer components are being sourced from British suppliers, threatening jobs

in this sector. A stable and competitive exchange rate must be a government

priority if companies are to continue to invest in and support manufacturing.

SMMT Chief Executive Christopher Macgowan said, ‘The motor

industry is responsible for some 800,000 jobs and generates £46 bn for the UK

economy. It simply doesn’t make sense for the Chancellor to continue to ride

on waves of uncertainty coupled with high exchange rates while loading manufacturers

with new taxes. As we wait for a decision on the single currency, companies

are sinking under a raft of tax and currency pressures.’

Companies in the automotive sector will be hit by the Climate

Change Levy on 1 April, increasing net energy costs by 10 to 15 per cent. Although

SMMT has negotiated a discount for several vehicle manufacturers, the narrow

qualifying criteria mean few in the sector can benefit. Those that have already

invested in energy saving will be unfairly penalised because they do not run

processes covered by the pollution prevention and control directive. SMMT has

urged the government to broaden discount criteria to reduce costs for those

demonstrating a real commitment to reduced energy use.

What else matters to the motor industry?

European – End of Life Vehicles Directive

The free take back of vehicles will create more costs for vehicle

manufacturers. Producer responsibility must not be imposed any earlier than

stated in the Directive, when its rules are implemented in April 2002. The industry

also believes costs of disposal should be fairly distributed among all the beneficiaries

of a vehicle throughout its life, not just the manufacturer. The government,

oil industry, insurance industry and recycling industry all take significant

revenue from the car throughout its life. They should contribute to the recycling


Truck tax and emissions

SMMT is pleased that the government gave valuable rebates on

vehicle excise duty (annual road tax) for all trucks. The new, simpler truck

tax system is also welcome. But there are anomalies at some weight bands where

the difference in payload capacity is out of proportion to the different truck

tax rates.

The new scheme also undermines the Reduced Pollution Certificate

system. It cuts the discount for expensive catalytic exhaust recycling traps

and makes their fitment punitively expensive. The government needs to think

again about incentives for environmentally friendly road transport operation

and SMMT has a number of innovative proposals which may save the nation billions

in truck fuel bills while making consistent and real cuts in emissions.

Research and Development

Government support for motor industry research and development

is needed in the drive to promote innovation in the UK. SMMT would like to see

some of the £54 million earmarked for regional innovation funds invested in

R+D and for the government to provide tax credits and other fiscal incentives

to stimulate investment.


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