SMMT Budget response

16 March 2005 #SMMT News

SMMT today welcomed plans to introduce guidelines for the implementation of new EU regulations. The announcement by Chancellor Gordon Brown in his Budget, will reassure an industry which has consistently raised concerns about increases in the regulatory burden and the effect that ‘gold plating’ has on UK competitiveness.*

SMMT chief executive, Christopher Macgowan, commented, ‘This is news that will be widely welcomed by all motor manufacturers. Today’s commitment to a light regulatory touch follows improved dialogue between industry and the government and should prevent unnecessary burdens on a sector facing rising supply chain costs and exchange rate pressures.’

The industry had urged stability in taxation and greater clarity on incentives to promote cleaner fuel and vehicle technologies in its Budget submission. Today’s statement presented a mixed bag.


SMMT has welcomed the freeze on corporation tax and the climate change levy. News that the minimum threshold for company car tax will be held at 140g/km of CO2 until 2007/08, has also been welcomed. It is a decision that brings long-term clarity to the new car fleet market.

SMMT is encouraged by the Chancellor’s decision to defer fuel duty rate rises until September 2005. However, with a volatile global oil market, the industry remains cautious about the cost burden that future ad hoc above inflation increases will bring for consumers after the election.


Plans to enhance R&D tax credits have been welcomed by SMMT. The move should ensure that more companies in the automotive sector are encouraged to allocate greater resource to this key area.

Cleaner vehicle incentives

SMMT is disappointed that the Chancellor failed to address concerns about cleaner vehicle incentives. Following the collapse of the Powershift scheme, manufacturers now need clear direction so they can plan for the introduction of the most environmentally friendly new vehicles. Government must address this urgently through dialogue with the industry on a new scheme based on stability and a technology-neutral approach.

Chancellor follows industry lead on new car labelling

The UK motor industry has taken a lead in producing better consumer information for new car buyers through its colour-coded label. Changing the way VED bands are categorised will now mirror the label’s A-F format, making the relationship between lower CO2 emissions and lower taxation clearer.

*An SMMT survey, commissioned in November 2004 among senior industry executives, showed that 95 per cent felt that the burden of legislation would add significant costs to their business in the next five years. Automotive Manufacturing – the Industry Perspective is available to download from

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