THE chancellor of the exchequer, Philip Hammond, has announced the government’s 2017 Budget.
As always, the Budget has an impact on the day-to-day and long-term costs drivers face.
Here are the key points from this afternoon’s autumn Budget, which focused on investment in technologies, including driverless cars.
Good news for drivers. The fuel duty remains frozen – the longest period it’s been unchanged in 14 years. FairFuelUK, a campaigning group, said it was “Pleased that the Chancellor has understood the debilitating effect of raising fuel duty on consumers, households, businesses and the broad economy.”
However, Matt Dyer, Managing Directorof LeasePlan, cautioned that even with a freeze, fuel prices are still rising: “If this continues, the Chancellor should consider cutting Duty rates for the first time since 2011.”
Company car tax for diesel cars
The chancellor is to increase the supplement for company car drivers that choose a diesel car. It will go up by 1%, and proceeds will help contribute toward a £220m clean air fund.
David Martell, chief executive of Chargemaster, said the move was “…great news, both for EV drivers and employers, giving businesses even more reason to install charging points at their premises for their employee, fleet and company vehicles.”
Road tax (VED) rates
Against a backdrop of a fall in the sales of new diesel cars, by as much as 30% compared with last year, the chancellor announced a change to VED rates. From April 1, 2018, new diesel cars that fail to meet the latest emissions standards will go up by one band. The difference could cost drivers as much as £500, for the first year of road tax.
By “latest emissions standards”, the chancellor was referring not to the current Euro6 test but the forthcoming Real Driving Emissions Step 2 (RDE2) standards. One of the stipulations of Euro6 is that new cars must emit less than 80mg/km of toxic nitrogen oxides (NOx) but cars that pass Euro6 lab tests have been shown to emit greatly more than 80mg/km in the real world; the new test is designed to help eliminate this discrepancy to some degree.
To complicate matters further, there is some leniency built into RDE2 in that cars that conform will not be penalised if they are found to emit 1.5 times the 80mg/km outside test conditions.
In a nutshell, though, the new rule means that some diesel cars built after April 1, 2018, which must all conform to Euro6 standards, may not pass the new RDE2 test and so would be subject to the VED supplement announced today. It’s not clear at this point how many new cars this may affect.
It’s important to note that this supplement, and any emissions-based tax structure, only affects new cars built after April 1 — any car up to that point is unaffected.
Also, even if a new car is affected, it only costs owners extra in the first year after registration — from year two, all petrol and diesel cars pay a standard annual charge of £140, unless they cost more than £40,000, when the attract an additional £310 charge for years two to six. This means that CO2 and NOx levels are irrelevant from the second year of a car’s life.
And the news is even better for white van man and white van woman: perhaps fearing a backlash from businesses, new commercial vehicles escape the levy on diesel vehicles.
Electric car and charging infrastructure support
Philip Hammond declared that “the world is on the brink of a technical revolution” and said Britain is at the forefront of the change but must invest to secure that future.
Even so, a common complaint from increasing numbers of drivers of electric cars is that public charging points are often busy or broken. To that end, the 2017 Budget has announced investment of £400m for additional infrastructure and charging points.
However, supporters of hydrogen-powered cars called for a level playing field. Hugo Spowers, founder of RiverSimple, a hydrogen car manufacturer, said “Increasing hydrogen refuelling stations is easier and cheaper than scaling the battery charging infrastructure because each hydrogen pump can support hundreds of vehicles, whereas each charging point can only support a handful. Hydrogen cars have considerable range advantage over battery electric cars and only take a few minutes to refuel, whereas battery electric cars take at least 30 minutes at their fastest.”
At the same time, an extra £100m is being made available to continue to incentivise the sale of ultra-low emission vehicles. And those company car drivers who charge their electric car at work will not face any benefit in kind tax.
It means the plug-in car grant can continue, meaning discounts for buyers of new models of £4,500 for Category 1 cars — those emitting less than 50g/km of CO2 and capable of being driven for 70 miles in electric mode.
The £2,500 grant will also remain in place, for Category 2 vehicles — those that emit less than 50g/km of CO2 and are able to travel for a minimum of 10 miles in electric operating mode.
However, vehicles that cost over £60,000 and meet Category 2 criteria will no longer qualify for a grant. Electric motorcycles and mopeds can qualify for a grant of up to £1,500.
“I know that Jeremy Clarkson doesn’t like them,” said Hammond, as he announced plans to invest in driverless cars.
Chancellor: “I know that doesn’t like driverless cars but that’s not a reason not to pursue the technology.” What’s he talking about?
— HotMailIniciodesesion (@ST_Driving)
As the world’s car makers and tech companies race to establish a foothold in the industry’s next big growth area, the Chancellor announced regulation changes for the UK that will allow developers to apply to test driverless (autonomous) cars on Britain’s roads by 2021.
The development vehicles would not have a safety attendant on board, ready to take control in the event of a problem.
The government said the industry would be worth £28bn to the UK economy by 2035 and will support 27,000 jobs.
A spokesperson for Intel Corporation, which makes electronic components, said its research estimates the economy created by autonomous driving will grow from $800bn (£603bn) to $7 trillion (£5.28 trillion) globally, as fully autonomous vehicles become mainstream, and the UK government’s commitment “marks the beginning of the global driving revolution.”
“By committing to adapt driving regulations, the UK economy will begin to witness this change and the benefits of this autonomous movement in as few as 4 years,” said Intel in a statement.
“The impact of the autonomous movement will also see a decrease in costs to the public. Savings from reduced traffic related accidents will top hundreds of billions globally between 2035-2045. Self-driving vehicles are also expected to free more than 250 million hours of consumers’ commuting time per year in cities such as London, which is among the most congested in the world.”
The government has chosen not to introduce any scrappage scheme, which sees a minimum financial incentive offered for old cars in return for buying a new model, instead leaving it to the car manufacturers.