Scrapping ECOS would inflict ‘substantial damage’, warns SMMT
The government has been warned against scrapping the Employee Car Ownership Schemes (ECOS) and introducing pay-per-mile tax in its Autumn Budget.
The Society of Motor Manufacturers and Traders has reported that new car sales were steady in October while a quarter of buyers opted for electric vehicles. However, it has said continued growth could be jeopardised by proposals to end ECOS and the introduce pay-per-mile taxation for electric vehicles.
CEO Mike Hawes said: “ECOS is vital for industry given around 100,000 new and increasingly zero emission cars a year are supplied through it, equivalent to around five per cent of the annual new car market.
“It is unsurprising, therefore, that its removal would inflict substantial damage on the new and nearly-used markets. As SMMT analysis shows, acute consequences for an already challenged sector would follow, costing UK automotive some £1bn, hamstringing future investment and putting manufacturing jobs across the country on the line.”
Lost revenue
Hawes continued: “More perversely still, ahead of an Autumn Budget that seeks to raise revenue, ending ECOS would actually incur a half-billion pound hit to the Treasury in lost VAT and Vehicle Excise Duty receipts. Such a sum, combined with the impacts on industry, would cost more than double the Electric Car Grant, a grant that was designed to stimulate sales and growth not counteract it.
“This risk is amplified even more by the possibility of pay-per-mile taxation for EVs, entirely the wrong measure at the wrong time, undermining manufacturer efforts to reach already challenging ZEV Mandate targets.”
He continued: “Thriving new vehicle markets are intrinsic to the UK’s appeal as a manufacturing investment destination and to the ambition set out in the Modern Industrial Strategy to restore the UK to a 1.3 million-unit automotive manufacturing hub by 2035.
“Delivering that ambition requires whole-government alignment on policies that drive competitiveness and growth. The Autumn Budget is the Chancellor’s opportunity to pull the necessary fiscal levers, with measures that allow market growth, tackle the UK’s high energy costs, bolster supply chain resilience, boost skills, attract inward investment, and deliver strong, free and fair trade.”
