Motor Industry says ”Realise the challenges and act, Mr Brown”

28 March 2002 #SMMT News

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?


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.

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