Roads spending, Brexit caution, business rate relief in spring Budget

UK chancellor of the exchequer Philip Hammond’s spring Budget contained the Office for Budget Responsibility (OBR) upgraded growth forecasts for 2017, while predicting lower – but rising – figures for the years following the assumed activation of Article 50 as the country leaves the European Union. The government also confirmed an extra £690 million will be added to the £1.3 billion announced in autumn to improve transport networks in urban areas. In other transport news, the freeze on fuel duty has been retained.

The upgraded growth forecast for 2017 from 1.4 per cent, as predicted in November, to 2 per cent was welcomed by the National Franchised Dealers Association (NFDA) director Sue Robinson. She commented: “The decision to revise growth forecasts for the year is a positive sign, which follows the better than expected performance of the UK economy over the final months of 2016 and its momentum in the beginning of 2017. We hope that the UK will continue to show its resilience in the upcoming months.”

The OBR also downgraded growth to 1.6 per cent in 2018, with slow gains rising to 2 per cent in 2021, indicating uncertainty after the process of exiting the EU is begun. It is also expecting consumer spending to slow down.

The further investment in infrastructure to tackle urban congestion in the UK and improve local transport networks, including £90 million made available to the North and £23 million for the Midlands from a £220 million fund which addresses pinch points on national roads, was welcomed by the NFDA. Robinson said, “UK roads development and maintenance was one of the crucial points outlined in the NFDA’s Budget submission and we are pleased to see that our concerns have been taken into consideration.

“A safe and efficient transport infrastructure is essential for a strong economy. Reducing congestion, increasing safety and improving journey times, will clearly benefit the UK economy facilitating the movement of both goods and people. Developing a strong internal transport infrastructure is key to our national economic development.”

Commenting on the fuel duty freeze, which will remain in place, Robinson added: “It is positive to see that the fuel duty has again been frozen. This will support motorists in a period of possible uncertainty due to factors such as the oil price rise and the weakening of the sterling.”

Major vehicle management group, LeasePlan UK’s managing director, Matt Dyer, added his analysis on the fuel duty freeze, in place since March 2011: “For almost as long as there have been petrol stations, fuel duty has been unavoidable, and sometimes controversial. It accounts for 57.95 pence of every litre of petrol or diesel that we buy. The rate of fuel duty has been frozen since March 2011, saving the driver in households and businesses on average £130 and those who work in logistics, with light commercial vehicles saving an estimated £350 per year.

“However, the UK still has one of the highest levels of taxation on fuel, which places an undue burden on motorists. This, it can be argued, restricts economic growth through lost investment and expansion by businesses. With inflation increasing, a litre of petrol has gone up by 19 pence in the last 12 months, whilst for diesel it’s 22 pence. Managing increases to the cost of living is likely to be one of Philip Hammond’s greatest challenges.”

IGA cautious on small business rate relief fund

While the Independent Garage Association (IGA) welcomed the chancellor’s announcement that no small business losing rate relief will see their bill increase next year by more than £50 a month, it added that more information is needed to see how the government will help the small businesses that make up the majority of the association’s membership to deal with, in some cases, severe rate increases. Stuart James, IGA director commented: “Although a majority of independent garages have not been affected by the 2017 business rate changes, we are aware that a number of our members have faced serious business rate increases, so we are pleased to see that a rate relief cap will be put in place.

“However, we still need further information about how the government will help small businesses who have faced severe rate increases but are not eligible for business rate relief. More details are again needed on the £300m fund for local councils to offer discretionary relief for hard-hit cases.”

“I also question why pubs have been singled out to have a £1,000 discount on their business rates bills – many independent garages are struggling with expensive taxes and bills too.”

Businesses throughout the UK have seen dramatic changes to their business rates after the first revaluation in seven years, where the government adjusts the value of business rates to reflect changes to property rental value. Although many areas of the country have seen their rates fall, London and the South East in particular have seen large increases.

Sue Robinson added: “It is extremely positive to see that no additional business taxes have been introduced. The NFDA asked for a period of stability following the introduction of the apprenticeship levy, increases in employer national insurance and changes to business rates. We are pleased to see that businesses’ concerns have been listened to and that the Government has remained committed to reduce the corporation tax over the next years.”

Speaking for the National Motorcycle Dealers Association (NMDA), Robinson added that although Hammond said he could not scrap business rates altogether as the tax brings in £25 billion a year, the discretionary relief fund was welcomed: “It is positive to see that the Chancellor has pledged to ease the burden on those hardest hit by business rate tax.”