Budget 2003 - RMI says: Chancellor could have done better

London, April 9 -- Commenting on the today's budget (Wednesday 9 April 2003), Matthew Carrington, chief executive of the Retail Motor Industry Federation (RMI) said: “The retail motor industry has been neither helped nor hindered by today's budget. Overall, the Chancellor's measures leave the sector at the same position as last year.”

Included was the news that 400,000 firms are now eligible to borrow from the Reformed Small Loan guarantee scheme, including retail businesses and vehicle repairers.

Carrington observed: “Although a number of measures were announced with the intention of helping small and medium sized businesses, including new investment allowances and reduced regulation for vehicle repairers, the sector as a whole received little in the way of encouraging news.”

The budget also introduced help for small and medium sized businesses (SMEs) with a turnover of less than £56,000.

Carrington said: “Businesses with very the small turnovers the chancellor referred to don't really operate in the motor industry. So raising the £56,000 hurdle rate before having to register for VAT is perhaps a benefit for those individuals just starting to establish a business. Perhaps the final detail will reveal further benefits for those that can opt for fixed level VAT payments. However, the freezing of all businesses tax rates will obviously help.

“Some effort has been made in this budget to reduce the problems for SMEs in managing government imposed 'red tape' but much remains to be done in this area. Government must appreciate that it's not just providing support to start up a small business that's required, it's protecting them afterwards against tough or even unfair competition from large corporations that's of even more importance. With small businesses, the Government's focus is always on development. They never pay enough attention to the nourishment of a business once it is up and running.”

Vehicle Excise Duty (VED) on cars and vans will rise by £5 in line with inflation. However, VED on lorries and motorcycles was frozen.

Carrington commented: “The RMI believes this could have gone further. While the VED freeze for lorries and motorcycles is welcome, we would like to have seen VED on mopeds withdrawn completely.”

Petrol:

Commenting on the deferred fuel duty rise, Ray Holloway, RMI petrol retailers director said:

“During the next few weeks fuel prices in the UK should fall, therefore a modest tax increase in the autumn should be offset for motorists and petrol retailers by the savings against current prices. Inflation has not been added in either of the Chancellor's past two budgets.

“Although duty on fuel will increase in line with inflation, as was expected, this could have been higher, so it is good news for consumers.

"Crude oil prices have fallen sharply since the war on Iraq began, but retail pump prices have not followed at the same rate because the steady rise since early December until late March was not just caused by the Iraq crisis. The Chancellor has therefore taken a cautious approach to application of the duty increase by deferring until 1 October, when it will surely be applied, perhaps because the government is still sensitive to the possible results of having fuel at 80 pence per litre and tax at 80%. This was a about 6 pence per litre average for petrol and diesel, a 'cocktail' that caused the fuel protests in September 2000.”

Training:

Following the Chancellor's announcement of additional help on training for business, Stephen Ramsay, managing director of RMI training body ReMIT said:

“ReMIT welcomes the further signs of the government's commitment to training and in particular the support to be given to Small and Medium Sized Enterprises (SMEs). There are large numbers of SMEs in the retail motor business currently contemplating how they might expand their training programme so that staff can keep pace with the rapidly changing technologies incorporated in today's vehicles. ReMIT will be supporting their needs, not only through the apprentice programmes for which it is well known, but also by providing facilities and opportunities for life long learning. ReMIT will shortly be opening its first purpose designed centre of excellence for the motor service and repair industry at Croydon, London.”

Notes to Editors:

The Retail Motor Industry Federation represents the interests of operators in England, Wales, Northern Ireland and the Isle of Man, providing sales and services to motorists and businesses. The RMI has a formal association with the independent Scottish Motor Trade Association which represents the retail motor industry in Scotland.

RMI ISDN line: +44 (0)20 7637 0231

Web: http://www.rmif.co.uk/