Auto industry welcomes manufacturing focus of Budget 2014

19 March 2014 #SMMT News
  • Long-term competitiveness of UK business environment is critical.
  • Focus on manufacturing and exports in line with automotive sector’s strengths.
  • Boosts to investment allowances and R&D tax credits welcome but business rates need attention.

Today’s Budget delivered a series of key measures to support UK manufacturing as part of a balanced industrial strategy, taking steps to encourage investment and exports.

Responding to the statement, SMMT Chief Executive Mike Hawes said, “The Chancellor’s focus on investment, exports and skills, as well as reducing energy costs for manufacturing, is welcomed by the automotive industry. Extending and doubling the Annual Investment Allowance and improving export finance are important signals to encourage the UK’s manufacturing base, helping trigger greater business investment and enhancing our export capability.

“In line with welcome reductions in energy costs, we ask government to look at business rates to ensure the system works for manufacturing and maintain our global competitiveness.

“We welcome measures to extend incentives for ultra-low emission vehicles (ULEVs) under the company car tax regime. Industry needs clear direction from government on how its £500m commitment to develop the ultra-low carbon vehicle sector between 2015-2020 will be allocated.”


Budget 2014 highlights from UK automotive



SMMT welcomes the Chancellor’s measures to encourage exports. With around 80% of vehicles manufactured in the UK exported to more than 100 global markets, these measures will help boost the UK supply chain as well as reaffirm the decisions of global vehicle manufacturers and suppliers.

Encouraging investment

Plans to double the Annual Investment Allowance to £500,000 and extending it to 2015 are welcome moves that will encourage businesses to invest further in plant and machinery.

R&D tax credits

Fuelled by major investment from global automotive manufacturers, the domestic supply chain presents a great opportunity for growth. With this potential in mind, government’s commitment to increase the R&D tax credit for loss-making SMEs from 11% to 14.5% from April 2014 will be welcomed by suppliers across the UK. While this measure moves in a positive direction, the system also needs to work for bigger businesses.

Energy costs

One of the biggest challenges facing businesses is rising energy costs. The £7bn energy package is helpful and the Carbon Floor Price freeze will limit the competitive disadvantage faced by UK automotive manufacturers and suppliers.

Company Car Tax and ultra-low emission vehicles

SMMT is pleased to see incentives for ultra-low emission vehicles receiving continued support through the company car tax regime. In its Budget submission, SMMT called for measures to encourage and support those looking to choose a low emission vehicle so it is pleasing to see business car users benefiting in this area.

SMMT looks forward to the outcome of the Office for Low Emission Vehicles’ call for evidence relating to the future distribution of its finances, which we expect later this Spring.


SMMT is pleased to see government provide an extra £85 million a year for over 100,000 apprenticeship grants to employers, and to provide £20 million over two years to support apprenticeships up to postgraduate level. Both measures send the right signals that apprenticeships are important to the future success of manufacturing in the UK, particularly in smaller and medium-sized businesses.

Consumer announcements

From 1 April 2014, VED rates will increase in line with RPI. There is a welcome addition of a rolling 40-year VED exemption for classic vehicles and cancellation of September’s planned fuel duty rise will be popular with motorists and businesses.

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