Stability and proportionality must be your watchwords, SMMT tells Chancellor

05 October 2007 #SMMT News

The fiscal and regulatory framework must be fair, realistic and certain. That’s the message SMMT has taken to chancellor Alastair Darling MP, in a letter ahead of the pre-budget report on 9 October 2007.


SMMT has also reaffirmed the importance of the sector to the economy (£48bn turnover, 190,000 manufacturing jobs) while pointing to significant progress made across a range of environmental goals, such as production efficiencies saving an estimated 700,000 tonnes annual CO2 at manufacturing sites across the UK.


‘Companies in the automotive sector are delivering sustainable growth and addressing the environmental challenge,’ said SMMT chief executive Christopher Macgowan. ‘Our members’ business activities, products and services must be seen as key to the solutions to these challenges, not as some would have it, the cause of market failures.’


SMMT has pointed to company car tax and vehicle excise duty (VED) to illustrate the points on fiscal stability. Since 2002 company car tax has been based on vehicle CO2 emissions with clear statements in the 2007 budget on thresholds for the next two years, incentives for flex-fuel (E85) and a 10 per cent rate for sub 120-g/km cars. 


The industry supports this approach, although the three per cent surcharge for diesel cars is anachronistic and should be withdrawn immediately since it penalises those who choose lower CO2-emitting models.


SMMT is concerned however, that unlike company car tax, the chancellor is under pressure to apply arbitrary rate changes, particularly at the top end, for Vehicle Excise Duty. This would be disproportionate and unnecessary.


Further changes would penalise families who need a larger vehicle and send worrying signals to the market. SMMT has also warned that such a move could undermine confidence among high-value manufacturers based in the UK, sending a message that threatens jobs and investment in UK plc.



At €20 bn, the automotive sector is Europe’s largest investor in R&D, driving industry forward and helping deliver more sustainable motoring for the 21st century. Technological innovation has helped car and CV manufacturers slash CO2 and air quality emissions from vehicles. New diesel cars for example emit 95 per cent less soot from the tailpipe than those made 15 years ago and average new car CO2 has been cut by 12 per cent since 1997.


Each vehicle made in Britain requires half the energy to produce than it did just five years ago, saving an estimated 700,000 tonnes of CO2 a year. Waste to landfill per vehicle produced has also been cut by a factor of four, from 66.4 kg in 2001 to 14.5 kg in 2005. For more details, download SMMT’s seventh annual Sustainability Report from the SMMT web site Or go on-line from Tuesday 9 October to download the 2007 report.

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