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Spring Budget implications

Published: 05/04/2017

Spring Budget implications

Air quality and plans for diesels

Diesel drivers received a clear warning as the Government plans to explore changes in the way such vehicles are taxed.

Budget report states that a detailed draft plan will be announced in the Spring concerning improving the UK’s air quality. The report states that “the Government will continue to explore the appropriate tax treatment for diesel vehicles, and will engage with stakeholders ahead of making any tax changes at Autumn Budget 2017”. 

Prior to the Budget, during Prime Minister’s Questions Theresa May said: “We are looking at the measures that we need to introduce to improve air quality. There have been improvements in recent years but we do need to go further and that is what the Government is looking at across most departments, with the Department for Environment, Food and Rural Affairs paying most attention to that as that’s within their remit.

“We will be bringing forward proposals on air quality in due course.”

RAC chief engineer David Bizley commented: “The chancellor has fired a warning shot to diesel drivers, with the suggestion in the Budget document that a new tax regime covering diesel drivers could be introduced before the end of the year.

“This uncertainty is bound to be of concern to private and business motorists alike, who will be wanting urgent clarity on just what the Government plans to do. The RAC will take a lead in representing motorists when the consultation goes live.”

Sue Robinson, director of the National Franchised Dealers’ Association, urged a ‘co-ordinated' approach. She added: “Promoting the uptake of the latest low emission vehicles will bring substantial gains in air quality, but we urge the Government to have a co-ordinated approach with car dealers and manufacturers regarding this issue. We are looking forward to engaging with the Government ahead of making any tax changes at Autumn Budget 2017.”

“Fleets will get the chance to have their say on diesel taxation in the coming months, ahead of what could be big changes in the Autumn statement,” added Paul Hollick, managing director of The Miles Consultancy and chair of the Institute of Car Fleet Management.

“One clue from the red book is that the Treasury expects revenues from fuel duty to rise by £2bn to £30bn a year by 2021.”

Fuel duty

The chancellor has kept fuel duty frozen at its current rate until 2018, following on from the announcement in the Autumn Statement.

Confirmed in the Spring Budget documents, the freeze means that fuel duty has been held at 57.95p per litre since the March 2011 Budget.

Howard Cox, founder of the FairFuelUK campaign, commented: “We are grateful for the last seven years, the Government has been listening to our objective campaigning on behalf motorists, van drivers and hauliers.”

However, LeasePlan UK’s managing director, Matt Dyer, highlighted that 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,” he said.

“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.”

Funding for driverless vehicle and EV battery research

The chancellor pledged £270m to keep the UK at the forefront of “disruptive technologies like biotech, robotic systems and driverless vehicles”.

These technologies will be supported through the Industrial Strategy Challenge Fund (ISCF), which will assist collaborations between business and the UK’s science base. The funding will cover an initial investment of £270m in 2017-18, which will include work in the development, design and manufacture of EV batteries. 

“The chancellor’s announcement of £270m for robots, driverless cars and biotech is a welcome boost for automotive companies and will benefit consumers,” commented John Leech, head of automotive at KPMG UK.

“This investment will enable the UK to be an early adopter of shared-use driverless cars and Britain’s consumers will enjoy the largest cost savings in the world from this technology.

“The measures announced today by the Government will support the development of internationally competitive businesses in the rapidly evolving mobility ecosystem.”


Following on from the Autumn Statement announcement of £220m funding to address pinch points on the national road network, the chancellor said that £90m would be allocated to the North and £23m for the Midlands.

He also launched a £690m competition for local authorities across England to tackle urban congestion and get local transport networks moving again.

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