Mike Hawes, SMMT Chief Executive, said, “Today’s budget provides some encouragement to an automotive sector hit hard by the pandemic and additional trading costs but it falls short of the support needed to transform the industry and market to the net zero future to which both the government and industry aspires. Confirmation that the industry’s calls for the furlough scheme to be extended until the end of September have been heeded and is extremely welcome as both the automotive manufacturing and retail sectors have suffered a massive fall in demand over the past year with showrooms still closed and supply chains disrupted.
Measures to support investment and upskilling are of vital importance to the sector but more is needed if the government’s green recovery plan is to be a success. Ensuring the UK has the most competitive environment globally for business investment is essential so, whilst we welcome in principle the announcement of a ‘super deduction’ for investment, it is not clear if it will work for manufacturing and plant and machinery so we now seek the fine detail and, ultimately, business rates reform to encourage investment.
Anything that encourages the recruitment of apprentices would have our full support and it is encouraging to see the accompanying “Build back Better: Our Plan for Growth” commits to upskilling and the need to address some of the weaknesses of the Apprenticeship Levy which does not work for many employers.
In this crucial year, with COP 26 in the autumn and the sector facing a mammoth task in decarbonizing within just nine years, we had hoped to see more measures to support the transition. This is an opportunity lost, so we look ahead to this year’s Comprehensive Spending Review for the commitment to the infrastructure, incentives and wider competitiveness measures that will enable the UK automotive industry to be the global leaders in the shift to net zero mobility.”
Steve Nash, CEO of the Institute of the Motor Industry said, “The difficult balancing act Rishi Sunak faces of supporting those most in need whilst starting to try to recoup some of the massive spend over the last year means that there are winners and losers in today’s Budget. For some parts of the automotive sector there will certainly be relief that the furlough scheme is being extended to the end of September.
Our latest analysis of ONS data suggests that since the beginning of November, the proportions of those in automotive on furlough has been increasing in line with the tightening restrictions across the UK. But with the path out of lockdown starting in April, hopefully those numbers will start to reduce, and importantly redundancy doesn’t have to be the option for those employees for which there won’t be immediate work. The longer timescale certainly gives businesses time to start to build up their income again and perhaps gives some of the 16,000 plus individuals who have already been made redundant new opportunities in the sector.
“Employers may also be encouraged by the £126m funding boost offered by Government for training. It remains to be seen whether this will encourage greater employer engagement with Traineeships or in offering the required on-the-job training associated with the new T Levels.
“But most disappointing is the lack of any real tangible support to improve apprenticeship take up. With the Government still refusing to waive the Apprenticeship Levy clawback, if funds are not used within two years, the picture for the apprenticeship route in automotive still looks bleak. Whilst apprenticeship starts in England as a whole dropped by 9% in November 2020, for the automotive sector the fall was much more significant. Apprenticeship starts in automotive in November 2020 were 33% lower than the previous year.
“We are also deeply concerned about the impact of the fall in apprenticeship starts in key parts of our sector which play a fundamental role in keeping Britain moving. Vehicle Maintenance and Repair, Vehicle Body and Paint Operations and Vehicle Parts Operations saw declines of almost 100% in apprenticeship starts in November compared to the same period last year.
“The IMI will continue to ask Government to rethink its stance on the Apprenticeship Levy clawback. It seems utterly counter-intuitive to urge employers to take on apprentices, yet not give them the flexibility and understanding that in the last 12 months the ability to start new apprentices and therefore use the levy fund has been limited. We need all sectors to support our efforts to keep this issue front of mind with the Treasury and Department for Education.”
Andy Hamilton, CEO of LKQ Euro Car Parts, said: “Today’s Budget has given the independent aftermarket some reasons to be cheerful after a long and tough year. The extension of furlough until September was a welcome surprise. It will give garages time to get back on their feet after restrictions hopefully come to an end in June, avoiding a possible cliff edge event. Importantly, it will allow the garages that will lose volumes of usual MOT work through April to July to cushion the gap and prepare for the new demand curve that we’ve seen through the later months of the year.
“The new small business corporation tax rate, business investment tax relief and funding for digital training all also have the potential to be really promising for the industry’s SMEs.
“Support for apprenticeships and traineeships is also hugely positive and cannot come soon enough. The lasting scars from the pandemic are likely to come in skill shortages as the usual cohort of fresh talent joining the sector every year more or less dried up because of the pandemic, with colleges also struggling to deliver courses. With the aftermarket leaning into some transformational changes over the next few years – from increasing digitisation to the rapid growth of the hybrid and EV parc – it will need all the support it can get to make up lost ground.
“It’s rarely the case that garages need an incentive to take on apprenticeships. The aftermarket is one area of the economy where the practice has been embedded into everyday business for decades. But they do need funding when workloads remain suppressed from their pre-pandemic levels.”