Experts are calling on Chancellor Rachel Reeves to resist hiking taxes that could cause 5,000 job losses and a massive hit to the UK’s car market.
November 26 will see the Chancellor unveil the Government’s latest spending plans, which have already sparked backlash over plans to hike taxes.
The motoring industry has set out proposals for the Chancellor to re-align fiscal measures with “pro-growth policies” that support the Government’s Modern Industrial Strategy.
The Government has set out plans to drive growth by increasing the volume of vehicles made in the UK to over 1.3 million cars and commercial vehicles by 2023.
Ministers have spoken of the desire for the UK to return to the helm of automotive manufacturing excellence.
To move towards this goal, the Government continues to invest in the electric car manufacturing sector and backs the Zero Emission Vehicle (ZEV) mandate.
However, organisations have warned of “severe and lasting damage to jobs” if the Chancellor moves forward with plans to end Employee Car Ownership Schemes (ECOS).
The calls from the Society of Motor Manufacturers and Traders (SMMT) highlight the importance of ECOS, especially with manufacturer remuneration packages.
Chancellor Rachel Reeves could oversee changes to Employee Car Ownership Schemes
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GETTY/PA
They allow employees to access the products they make and sell affordably, even though the Government plans to reclassify ECOS vehicles to make them liable for company car tax.
Commenting on the plans, Mike Hawes, chief executive of the SMMT, warned that changes to ECOS would make company cars unaffordable for as many as 60,000 auto workers.
He said it would “hamstring” the new and nearly-used car markets if around 80,000 new cars were no longer registered, especially with many of them being zero emission.
The expert said the knock-on effects for the manufacturing sector would be “significant” by effectively docking the wages of workers.
It could also cut off transport options, and even reduce output by 20,000 units at an annual cost of £1billion.
Mr Hawes warned that the decision to cut ECOS could put 5,000 manufacturing jobs around the country at risk.
He continued, saying: “Perhaps even more incomprehensible, just as Government needs to raise revenues and double down on growth, ending ECOS invites the loss of half a billion pounds a year from discarded VAT and VED receipts.
“That this is entirely the wrong measure at entirely the wrong time.”
The SMMT has warned that job losses could be likely if certain schemes are cut
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PAThe proposal has also been slammed by Robert Forrester, chief executive of car retailing group Vertu Motors, who warned that ECOS changes could cost up to £2.5million.
Around 250 members of Vertu Motors’ staff take advantage of the schemes, with Forrester calling it “completely counter-productive”.
“We have written them a letter explaining to them that this will lead to a significant fall in the new car market – it’s currently, we believe, five per cent of the total new car market,” Mr Forrester told The Independent.
A HM Treasury spokesperson told GB News: “The Chancellor makes tax policy decisions at fiscal events. We do not comment on speculation around future changes to tax policy.”