Budget 2020: What does it mean for motorists?
Following Chancellor Rishi Sunak's first budget, we look at whether it was good or bad news for drivers...
The government has announced new funding for electric vehicle charging, pothole filling and road improvements as part of its annual March budget.
In his first budget as Chancellor, Rishi Sunak announced a new package worth £27 billion for strategic road improvements over the next five years, including an extra £2.5 billion to repair 50 million potholes over the next five years. The Chancellor dubbed the announcement as representing the largest investment ever in the transport sector.
Below, we look at each of the Chancellor's other announcements, and how they affect motorists and car buyers.
Electric vehicle charging
The Chancellor announced a new £500m funding pot, to be spent over the next five years, to help grow the UK's rapid charging network for electric cars. The intention is that drivers will never be more than 30 miles away from a rapid charging point. The fund is primarily designed to cover the cost of businesses installing fast charging points on their premises.
According to charging point locator Zap Map, there are currently close to 18,000 charging points in more than 11,000 locations across the UK.
Plug-in vehicle grant
In addition, the current grant for those buying an electric vehicle, due to run out at the end of this year, has been extended to 2023 in a move worth £403 million. However, the current grant of up to £3500 will be cut to £3000 on orders placed from 12 March. In addition, the grant is no longer available on cars costing more than £50,000.
Industry body the Society of Motor Manufacturers and Traders had wanted the government to go one step further by abolishing VAT on electric and plug-in hybrid cars. The group said that this would increase sales of such cars to just under one million by 2024, resulting in the saving of 1.2 million tonnes of CO2.
So far in 2020, more than 6500 purely electric vehicles have been sold – a rise of more than 200% on the same period in 2019. However, such cars still represent just 2.9% of total cars sold. More than 160,000 buyers have made use of the grant since it was introduced in 2011.
Elsewhere, the budget confirmed that electric vehicles will be exempt from the so called Expensive Car Supplement, which can add up to £1600 in tax over five years on cars costing more than £40,000.
Potholes
The new pothole fund amounts to £500 million per year over five years. That money falls well short of the estimated £9.8 billion that's needed to completely fix Britain’s pothole problem.
Local councils filled in more than 15,000 potholes in 2018/19, but more than 700,000 potholes were reported in the 2018 financial year alone. Additionally, more than £1.9 million was paid out in compensation claims to motorists who had their cars damaged by potholes, with the average claim amounting to £257.
HM Treasury has said that the money will be available to local councils to spend on resurfacing works, aimed at preventing potholes appearing in the first place.
Potholes on motorways are required to be repaired within 24hrs, but on local roads maintained by councils it can take far longer. Indeed, definitions on exactly what constitutes a pothole varies by council.
Fuel duty
It was widely believed that the Chancellor would use this budget to end the freeze on fuel duty – a freeze that has been in place for the past nine years. Instead, he has extended it for another year.
Fuel duty is included in the price you pay for petrol and diesel, and currently stands at 58p per litre for petrol and diesel, and 32p per kilogram for liquid petroleum gas (LPG) fuel. Taxes including fuel duty and VAT make up about 60% of the price you pay for fuel.
A recent survey of 3200 motorists conducted by the RAC found that just 10% were in favour of ending the freeze on fuel duty. In the same survey, almost 60% of respondents said they wanted to see extra funding to improve road infrastructure as part of the budget – paid for by ring-fencing 2p from every litre of petrol and diesel sold.
Days before the budget, the Chancellor was warned not to raise fuel duty by a group of 36 Conservative MPs, who said that the government should not “balance environmentalism on the backs of working people.
“They depend on their cars, vans and lorries to get about and run a small business. Every penny of a fuel price rise hits their financial security.”
During December’s general election campaign, Prime Minister Boris Johnson had said that his government had “absolutely no intention” to raise fuel duty.
Red diesel
The Chancellor also announced the end of tax relief on red diesel in all sectors except agriculture, fish farming and non-commercial heating. Buyers of red diesel currently pay 11p per litre of tax on fuel, compared with 58p for regular buyers.
Red diesel is the same as regular diesel, but is used in vehicles that aren't taken on the road – for example, tractors and other agricultural or construction vehicles.
In his speech to the House of Commons, the Chancellor noted that sectors using red diesel contribute heavily to the country's emissions.
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