Budget 2011: The reaction

Time 11 years ago

money-coin-pile-copyWHAT does 2011’s Budget mean to car dealers? Here industry experts explain all in our round-up.

Today Chancellor George Osbourne delivered the Budget with a hold on fuel increases, fuel prices to be dropped by 1p, an extra £100m to be found to fund pothole work on the nation’s roads, and the reduction of Corporation Tax being the headline announcements.

Here, Car Dealer is publishing the opinion from the industry as and when we receive it.

Paul Everitt, chief executive, SMMT

‘Budget 2011 recognised the strength of the UK manufacturing sector and its ability to steer our economy out of recession. We are pleased to see that the Chancellor’s plans have a strong focus on manufacturing and making the UK an attractive place to invest. The outlook is certainly still challenging, but we are encouraged by the impact these measures will have on our sector and the wider economy.’

Sue Robinson, director, RMI

‘Announcing that corporation tax will fall by two per cent in April and continue to fall till the rate is twenty per cent will be a major boost to businesses. Other measures such as increase in the funding of apprenticeships, the setting up of enterprise zones and extension of rate relief for small business will give welcome relief to all businesses. This is in turn will allow increased investment and job creation in the retail motor sector.’

Brian Madderson, chairman, RMI Petrol

‘RMI Petrol positively welcomes the Government’s decision in today’s Budget to cancel the fuel duty escalator due on April 1. With the 1.00ppl headline increase, the Retail Prices Indexation adding 3.00ppl plus VAT at 20 per cent, we predicted that this would have imposed an additional 5.00ppl onto the pump prices of fuel.

‘This legacy of the Labour Chancellor, Alistair Darling, who never consulted industry and ignored the plight of the UK motorist, would have had a severe impact on economic recovery at a time that is already one of the harshest that consumers and businesses have had to endure in many years.

‘RMI Petrol had recommended that the Government reduce fuel duty immediately to be funded by the windfall tax gains accruing from the 20 per cent VAT rate on higher pump prices. Therefore the news of the immediate 1ppl duty cut has been very well received by forecourt operators and their customers.

‘We look forward to working with the Chancellor and his advisers as they consult with industry on fuel issues in the future.’

Richard Lawton, spokesperson for

‘The reduction in fuel duty will benefit everyone, from all those working in the haulage industry to families running ordinary cars like a Ford Focus as George Osborne mentioned.

‘The increase in Approved Mileage Payments is also welcome even if it still ignores the true cost of running a car. This makes it easier for businesses to recognise and reimburse staff for the work they undertake using their own cars. It is still going to be a tough year for businesses and for their employees but at least there has been some recognition of the challenges facing all of us.’

Ken Trinder, head of business development, epyx

‘The fleets and dealers that we work with have become extremely lean and focused during the last two years and, having survived the recession and maintained or regained worthwhile profitability, are facing the future with a limited but definite sense of optimism.

‘There is little in this fiscally neutral Budget that looks as though it will substantially change that outlook in the short to medium term, despite the ‘feel good’ news on fuel duty. The Chancellor’s plans to encourage growth and investment such as the Corporation Tax cut are welcome but, if they do have an effect, it will not be for some time.

‘In the immediate future, it will be down to each individual business to ensure that it continues to minimise costs, maximise opportunities and maintain attention on profitability.’

Neville Briggs, managing director, Pinewood Computer Solutions

‘The current economic situation means that there is little wriggle room for the Chancellor when it comes to providing a fillip to the motor industry and, despite the Chancellor pulling a rabbit out of the hat on fuel duty, there is really nothing in the Budget that prompt dealers or manufacturers to consider the remainder of 2011 in rosier terms than before, especially considering general factors such as the reduced growth forecast, rising inflation and high unemployment.

‘However, dealers have become impressive since the recession in their ability to exploit almost every opportunity in new cars, used cars and aftersales. For that reason, many are mildly optimistic about their prospects in the medium term.’

Reg Rix, managing director,

‘With a focus clearly around supporting small businesses and making day-to-day living economically more manageable for the average family, Mr Osbourne delivered a Budget which will no doubt ease the burden for both dealers and motorists alike.

‘The most notable announcement, is the scrapping of the Fuel Duty Escalator and subsequent 4p fuel duty rise due to come into effect next week, alongside the introduction of the Fair Fuel Stabiliser, was further heightened by the Chancellor’s surprise move to reduce fuel duty by 1p which to take effect at the petrol pumps from 6pm tonight.

‘This decision, coupled with the 2 per cent reduction in Corporation Tax, will no doubt leave dealers breathing a hesitant sigh of relief as pressures on the bottom line begin to take a small but much needed respite.

‘Smaller independent dealerships, particularly those employing 10 staff or less, have received an additional level of support with the announcement that businesses of this particular size will be exempt from all domestic regulations from April this year.

‘However, the statement that small businesses will benefit from an additional 15 per cent credit availability from the banks will most likely be met with a mixed response. Although on the surface this appears to be a positive step, whether the banks actually follow through on the promise of delivering additional credit remains to be seen.

‘As part of the Chancellor’s outlined objective to make the UK’s workforce one of the most educated in Europe, the re-introduction of ‘technical colleges’ across the UK is an interesting development for the motor sector. As an industry which requires a higher percentage of practical qualifications in order to get a foot in the door, this educational shift could see the motoring sector opened up to a much larger number of talented young individuals, currently unable to gain access to the right level of training.

‘Along the educational theme, it is also worth highlighting that the Chancellor’s focus on increasing the number of apprenticeships available for young people will fall to the private sector, with dealerships in a prime position to offer sales or aftersales positions. The Government will most definitely be looking at the motoring industry as a whole to help fill the apprenticeship gap and dealers would be wise to take stock and see where a young individual could offer support within their business.

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‘Dealers should feel positive about today’s Budget announcement, but it’s unlikely that the forthcoming changes will return the industry to its former glory overnight. There is undoubtedly still a long road ahead to complete the recovery. However, a Budget which is aimed at supporting businesses and encouraging the public to continue spending by reducing day-to-day financial burdens, is most definitely a step in the right direction.’

This will be updated throughout the day as more responses are issued

James Batchelor's avatar

James – or Batch as he’s known – started at Car Dealer in 2010, first as the work experience boy, eventually becoming editor in 2013. He worked for Auto Express as editor-at-large and was the face of Carbuyer’s YouTube reviews. In 2020, he went freelance and now writes for a number of national titles and contributes regularly to Car Dealer. In October 2021 he became Car Dealer's associate editor.

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