Budget 2015: Fuel price frozen again; slower tax rises for cleaner company cars
Wed 18 March 2015
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The Chancellor has announced £100m support for driverless cars and slower rises in Company Car Tax for ultra low emission vehicles (ULEVs) in Budget 2015. In other measures, Mr Osborne has again frozen duty on petrol and diesel and provided support worth £1.3bn for the North Sea oil industry which has been hit by lower oil prices.
Mr Osborne said: "To encourage a new generation of low emission vehicles, we will increase their company car tax more slowly than previously planned, while increasing other rates by 3% in 2019-20.”
This follows the announcement in last year’s Budget of a 2% rise for cars emitting more than 75 gCO2/km, to a maximum of 37%, in both 2017-18 and 2018-19.
The Chancellor has also confirmed £60m for a new 'energy centre' in Birmingham and the Government's decision to enter in to the first phase of negotiations on a potential tidal lagoon for Swansea Bay.
The decision to locate the new Energy Systems Catapult in Birmingham follows agreement with the Energy Technologies Institute (ETI) to merge their existing Smart Systems and Heat Programme into the new Catapult. The centre has been set up "to exploit commercial opportunities for new products and services created by the transformation of energy networks".
The £100m for driverless cars will be matched by a similar commitment from business, to help fund research and development on the computer and telecoms systems needed to make the cars a reality.The Chancellor said the money would help the UK’s “brilliant automotive industry ... to stay ahead in the race to driverless technology”.
Now companies will bid for funding through a series of competitions, with projects expected to work collaboratively between the automotive, telecoms, IT and infrastructure sectors, exploring how driverless vehicles would connect to each other and the wider transport system.
In announcing £1.3bn support for the North Sea oil industry through reductions in Petroleum Revenue Tax and the Supplementary Charge for oil and gas, the Chancellor said: "The fall in oil price poses a pressing danger to the future of our North Sea industry unless we take bold action." The move has been criticised by environment groups and by The Guardian newspaper, which is currently running a series on climate change, who point out exploiting even currently proven fossil fuel reserves threatens to result in dangerous temperature increases.
Commenting on the tax incentives for ULEVs through lower increases in company car tax (CCT), Andrew Hogsden, senior manager for Fleet Consultancy at Lex Autolease, said (quoted in Fleet News): “The announcement that benefit-in-kind (BIK) rates will rise by 3% in 2019 makes it even more important for businesses to identify vehicles with low CO2 emissions that are both fit for purpose and attractive to drivers.
“They should also consider new and alternative technologies, which will become increasingly available by 2019, as well as best in class traditional fuels.”
However, John Pryor, Chairman of the Association of Car Fleet Operators, said: “The Government is ploughing hundreds of millions of pounds to encourage the uptake of zero and ultra low emission company cars so ACFO is disappointed that benefit-in-kind tax rates on these vehicles (0-50 g/km) are increasing further in 2019-20.
“Given the government’s focus on encouraging demand for electric and plug-in cars through a range of incentives, notably grants, ACFO would have expected the Chancellor to reduce company car benefit-in-kind tax rates, not increase them, on these vehicles.
David Powell, senior economics campaigner, Friends of the Earth said: "With growing calls to divest from fossil fuels, massive tax breaks aimed at squeezing more gas and oil out of the ground show how dangerously out of touch the Chancellor is on climate change."
"The Chancellor should heed the Bank of England's warning about the threat climate change poses to our financial well-being by ditching support for gas and oil extraction - instead of propping it up."
John Cridland, Director-General of the CBI said: "The oil and gas industry, which supports 450,000 UK jobs and is a major contributor to GDP, has been given a much-needed boost with the reduction to the supplementary charge and other incentives. This will help address concerns over job losses and investment freezes, but pressures remain due to low oil prices."
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