SMMT – a cautious welcome to pre-budget statement

05 December 2005 #SMMT News

The motor industry today welcomed the focus on stability and more streamlined regulation in the chancellor’s pre-budget statement.

SMMT chief executive Christopher Macgowan commented, ‘While the outcome of long-term review in areas like transport, energy, skills, climate change and pensions may present challenges in next spring’s statement, Gordon Brown today announced a number of measures that should help cut the cost burden to business and support the short-term development of competitiveness for UK plc. The devil may be in the detail, but broadly today’s statement is a positive one for the motor sector.’

Competitiveness tests for new regulation:

SMMT welcomes the chancellor’s intent to propose competitiveness tests for existing and new EU regulation. It follows the prime minister’s speech to the CBI conference last week in which he announced measures to cut red tape for UK business. The industry has been united in its concern about both these issues and supports steps to address this key cost pressure.

Fuel duty:

Soaring oil prices have hit companies operating in the automotive sector hard this year. The chancellor’s freeze in duty rates is therefore welcomed.

Cleaner vehicles:

The motor industry is pleased that innovation in car manufacturing has been praised in the drive to cut average new car CO2 emissions. Furthermore, the industry’s Green Label initiative has been cited as an important step forward in improving information flows on vehicle emissions and raising consumer awareness of possible fuel savings.

As well as technology and better information, incentives are crucial to the take-up of the cleanest new vehicles. SMMT looks forward to responding to the consultation on proposals for tax incentives for new Euro 5 cars and small vans and will urge for the inclusion of commercial vehicles.

However, in addition to Euro 5 incentives, urgent action must be taken to secure grant funding for the cleanest new cars and other vehicles following the collapse of EST-managed schemes such as Powershift earlier this year.


Enhanced capital allowances for the cleanest biofuel production plants will help fuel companies meet the new bio-fuel obligation in the most carbon-efficient manner.

Research and development:

The motor industry welcomes the announcement of more support for R&D tax credits and will study these changes in detail.

On transport infrastructure:

Investment in transport will rise from £26bn to £29bn from 2006 to 2007, according to the chancellor. This statement is welcomed. However, investment in roads must not be allowed to take a back seat, since roads remain the arteries that build a competitive UK and help address what the chancellor described as ‘the challenge of globalisation’.

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