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Autumn Statement and Spending Review

Posted on by Matt Topham
The famous chancellor's red breifcase

Chancellor of the Exchequer George Osborne delivered the Government’s annual Autumn Statement in the House of Commons today (Wednesday, November 25).

Sometimes described as a mini-Budget, he revealed to the nation the state of the country’s economy and public finances, in line with the latest economic forecasts from the independent Office for Budget Responsibility. Post the May general election, the Autumn Statement was combined with the Spending Review, which determines how the government will, over the course of the Parliament, spend on Government departments and public services £4 trillion of taxpayers’ money - up from £3.6 trillion in 2010/15.

 

Calling the Conservative government “the builders”, Mr Osborne said that when he presented his first Spending Review in 2010 the “economy was in crisis” and the task was “to rescue Britain”. In publishing his second Spending Review, Mr Osborne said the job was to “rebuild Britain”. He continued: “Build our finances. Build our defences. Build our society. So that Britain becomes the most prosperous and secure of all the major nations of the world.”

He also pledged that economic growth over the Parliament to May 2020 would move Britain from a deficit of £75.3 billion to a surplus of £10.1 billion with more than one million additional jobs created over the prior. Below we highlight what the Chancellor said in relation to the UK fleet industry and the wider motor industry in the 2015 Autumn Statement and Spending Review.

Company car tax

The government is retaining the 3% diesel supplement in company car tax until April 2021, thus reversing a decision announced in the 2012 Budget. It had been expected that from April 2016 the 3% diesel supplement differential would be removed so that diesel cars would be subject to the same level of tax as their petrol-engine rivals. However, amid the ongoing furore over the relevance of the current vehicle emissions testing regime and the moves to introduce a system linked to real world driving, the Chancellor has made a U-turn on the 2012 decision.

He told the House of Commons that the supplement would be retained until new European Union-wide emissions testing procedures would ensure new diesel cars met air quality standards even under strict real world driving conditions. Retention of the 3% supplement is forecast to raise an additional £1.36 billion for HM Treasury in the five years to 2020/21.

Ultra-low emission vehicles

The government has yet to announce the new structure of the Plug-In Car Grant set for introduction next year. With the current flat rate car grant due to run until “at least February 2016”, it had been expected that the Chancellor would use the Autumn Statement to announce the full details of the new regime. Earlier this year, the government announced that the new grant scheme would be a three-tier structure linked to vehicle emissions and the zero emission mileage range of vehicles.

The government wants the corporate sector to drive demand for plug-in vehicles, but with no announcement on the structure of the new grant it is difficult for fleets to plan their company car decision-making long term. However, the Chancellor did commit the government to spending more than £600 million between 2015/16 and 2020/21 to support uptake and manufacturing of ultra-low emission vehicles (ULEVs) in the UK.

He said the cash commitment would maintain the global leadership that had seen one in four of all European electric vehicles built in the UK and would keep the UK on track for all new cars to be effectively zero emission by 2040. He promised that investment would save 65 million tonnes of carbon and help deliver the long term answer on urban air quality. 

Car fuel benefit charge 2016/17

Employees who are in receipt of company-funded fuel used privately will see their benefit-in-kind tax bills rise from April 6, 2016. The Chancellor announced in the Autumn Statement that the fuel benefit charge multiplier for company cars would increase from £22,100 in 2015/16 to 22,200 in 2016/17. 

Van benefit charge 2016/17

The van benefit-in-kind tax charge would increase from £3,150 in 2015/16 to £3,170 in 2016/17, the Autumn Statement confirmed. 

Van fuel benefit charge 2016/17

From April 6, 2016 the van fuel benefit charge multiplier would increase from £594 in 2015/16 to £598 in 2016/17, the Autumn Statement has confirmed.

Salary sacrifice

Consecutive Budget and Autumn Statement announcements have included a warning about the popularity of salary sacrifice schemes and their impact on the government’s tax take.

The Chancellor told the House of Commons in his latest Statement: “The government remains concerned about the growth of salary sacrifice arrangements and is considering what action, if any, is necessary. The government will gather further evidence, including from employers, on salary sacrifice arrangements to inform its approach.”

Road infrastructure and maintenance

The government is focused on “building for the future” and to that end it plans to spend £15.2 billion on constructing new roads - a total of 112 schemes - and £6.9 billion on road maintenance over the next five years.

The government in announcing a £120 billion Department for Transport capital spending budget said it would publish a National Infrastructure Delivery Plan next spring, setting out in detail how it would deliver key projects and programmes over the next five years

The Chancellor said that the Roads Investment Strategy signalled the biggest investments in roads since the 1970s. It will include resurfacing more than 80% of the strategic road network, and delivering more than 1,300 miles of additional lanes, the equivalent of travelling from Bristol to Newcastle four times.

In addition, the Spending Review and Autumn Statement provided £250 million over the next five years to tackle the potholes that blight local roads, on top of the funding for roads maintenance. It was, said the Chancellor, “a permanent pothole fund”.

Future roads investment, said the Chancellor, would be underpinned by a new Roads Fund paid for directly from the revenues of Vehicle Excise Duty from 2020/21. As a result, a second Roads Investment Strategy would be published before the end of the Parliament.

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