As the post-election dust settles, the eyes of the small business community are on the new Conservative government and what it holds in store for them. Fleet operators will wonder how Tory statements on issues such as red tape, taxation and investment in infrastructure will materialise into policy, and how new measures will affect them in practice. Indeed these things may look very different after the chancellors’ planned Summer Budget in July.
Rupert Pontin, head of valuations at motoring guide Glass’s, said: “Any reduction in red tape is bound to be good news for SMEs, but the key initiatives likely to impact the smaller organisations will be around taxation.”
He explained that the key taxation issues for fleet operators are those concerning CO2 and NO2 ratings, which affect everything, from fuel cost element and benefit in kind for employees, to vehicle road tax. Taxation is also a factor in the selection of new vehicles and the longevity of service of older vehicles, he said.
There has been particular concern around what may be imposed on light commercial vehicles and heavy commercial vehicles.
Better incentives should be offered to encourage people to use lower emission vehicles particularly the use of Electric and Hybrid vehicles, says Pontin. “Depending on ownership models, it may be prudent for SMEs to consider the impact on future residual values (depreciation) for end of use vehicles as these values will be dropping as a greater volume of vehicles return to the used market,” he says.
A real concern is that greater taxation on the private user, specifically around diesel powered vehicles, will impact on what fleets may see as a financial return. This in turn may dictate the deposit available for a replacement vehicle.
The government will also have to commit to considerable investment in green vehicles if these are to become commercially viable in fleets. Electric vehicles currently lack the range for mass use, but sustained investment in electric taxis and buses could accelerate their development to the point at which they are practical and viable for both consumers and fleets.
One government decision that has been welcomed by SMEs that operate fleets is the pledge to maintain the freeze on fuel duty. “It’s no coincidence that the period of this freeze has coincided with Britain’s return to economic competitiveness, led by growing confidence in SMEs,” said Patrick Gallagher, chief executive of courier and logistics firm CitySprint. “We would urge the new government to maintain this freeze to ensure that fleets can continue their contributions to SME logistics and e-commerce.”
Collaborate 2014, a survey carried out by CitySprint showed that 16% of SME owners raised red tape as a concern for their business, while a further 15% were concerned about a lack of access to talent.
Gallagher said the industry would welcome reforms that enable SMEs to collaborate, take on apprentices more easily and outsource functions that are acting as an impediment to growth.
“SMEs can now compete with bigger companies by bringing in partners to provide functions traditionally associated with scale, such as IT or fleet delivery, so steps to facilitate this collaboration and outsourcing would benefit to the economy as a whole,” he says.
Britain’s road networks are seen as the lifelines of the economy, so ensuring they are fit for purpose for the millions of business vehicles that use them every day is another important issue for fleet operators.
Research from the RAC suggests that small businesses are paying almost £2,000 a year, per vehicle, for repairs and maintenance. RAC business spokesman Simon Peevers says: “Some of those repairs will undoubtedly be down to damage caused by potholes and the condition of the roads. The government needs to stick to its commitment to upgrade those areas of the network that are under pressure.
“The cost of fuel and the state of the roads are areas where government can take real action and provide meaningful support to businesses trying to make their way on the road to recovery.”
Many SME owners are hoping that the chancellor’s Summer Budget will look at future transport-related policies set to impact their fleet operations.
Simon Staton, director at fleet management company Venson Automotive Solutions, thinks the government may pick-up on recent research from the Centre for Economics and Business Research (CEBR), which was commissioned by the Society of Motor Manufacturers and Traders (SMMT), and called for reform of Vehicle Excise Duty.
It found that more than two-thirds of new cars (68.6%) registered last year fell into the sub-130 g/km threshold for £0 first year Vehicle Excise Duty leading to question marks about the tax’s future and possible reform as a means of generating government revenue.
“The SMMT warned that ‘this tremendous success’ in reducing average new car emissions raised questions about the future shape of taxation and incentives in the UK; questions, it said, that would be a priority for the next government,” says Staton.
Recommendations have already been put forward by the CEBR to safeguard Vehicle Excise Duty revenue, which will affect SMEs that operate fleets.
These include a gradual evolution of bandings for cars, particularly segmentation of the current top band A, the phasing in of a first year rate of Vehicle Excise Duty for cars in bands B, C and D (101-130 g/km), currently uncharged, and the introduction of a new Vehicle Excise Duty for light commercial vehicles, which graduates by their CO2 emissions per tonne of loading capacity.
There has also been some speculation over possible reforms to Approved Mileage Allowance Payments, a long-time goal for representative organisations such as ACFO and the British Vehicle Rental and Leasing Association, and a long-awaited decision by HM Revenue and Customs on mileage reimbursement rates for electric cars.
However, the RAC’s Peevers insists that SME fleet operators, in the main, will be looking to the new government to maintain the current course. He added: “The worst thing right now, while the recovery is still in a fragile state, would be for any uncertainty to undermine confidence.”
Content on this page is paid for and produced to a brief agreed with Kia Fleet, sponsor of the Guardian Small Business Network Accessing Expertise hub.
Other articles from the Kia Fleet partnerzone:
No dramas: The security firm keeping the peace in Brighton - video
