SMMT today urged the Chancellor, Rt. Honourable Gordon Brown
MP, to face up to the issues dogging the UK automotive sector and act accordingly
in the forthcoming budget.
- No increase in motoring taxes
- Current exchange rate causes UK businesses to suffer against
weak Euro competition
- Research and Development tax breaks do not go far enough
As the global market becomes more competitive, currency fluctuations
are impacting on British industry more than ever. Sterling has appreciated by
more than 35 per cent since 1996, and despite manufacturers’ improved productivity
in the UK, the weak Euro is still hitting businesses hard.
While Sterling remains strong, component manufacturers in particular
will continue to struggle. Eighty per cent of vehicles are exported from the
UK to the Euro zone, and fewer components are being sourced from British suppliers,
threatening jobs and investment at home.
Commenting on the submission, SMMT Chief Executive Christopher
Macgowan said, ‘The UK automotive sector saw positive results in 2001, and we
now need a stable economic platform to move forward as an industry. The commitment
to Britain from manufacturers and component makers is clear – what we need to
see is a series of measures from the Chancellor that recognises and rewards
that commitment.’
What else is affecting the motor industry?
Taxation
VED has undergone radical reform over the last few years and
the changes have been broadly welcomed by the industry. Stability is now required
and SMMT would like to see no further changes and the current rates maintained.
Research and Development
The motor industry has recognised that R&D is critical
to enhancing a viable vehicle and components base in the UK and, in part, this
has been recognised by the Chancellor too. However, the Chancellor must go further
with the removal of fuel duty on automotive fuel used solely for research and
development as well as testing if the UK’s position as a centre of R&D is
to be maintained.
End of Life Vehicles Directive
The implementation of the End of Life Vehicles Directive continues
to cause major concerns for manufacturers. Despite responding to a DTI consultation
document and proposing a ‘win win’ solution, which made maximum use of the current
infrastructure, SMMT is still yet to have any formal response from Government
on its submission. Any implementation must respect the dates established in
the Directive for the introduction of the free take back obligation – 2002 for
new vehicles and 2007 for the existing vehicle parc.
It should also avoid imposing a retrospective obligation for
the entire vehicle parc, which would impact heavily on the motor industry.
Motor industry needs dedicated skills councils
SMMT would like to see adequate representation in the network
of Sector Skills Councils that are currently being set up. The motor industry
has very specific needs in terms of manufacturing and retail operations. The
strength of the UK automotive skills base is crucial to future competitive advantage.
