Carmakers call for tax breaks for green growth

20th September 2011


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  • Mitigation

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IEMA

The UK's automotive sector needs sustained government support if it is to take advantage of the opportunities offered by a low-carbon market, according to the Society of Motor Manufacturers and Traders (SMMT).

As the party conference season begins, the SMMT is calling on MPs and political advisors to back new financial incentives it says are vital to encourage the investment needed to develop low-carbon vehicles.

It launched its campaign yesterday at a meeting with Liberal Democrat MPs and MEPs, including the chief secretary to the Treasury Danny Alexander MP and former shadow transport minister John Pugh MP.

“Automotive manufacturing can drive UK economic recovery and lead the transition to a low-carbon future if targeted incentives are in place to encourage private sector investment,” argues Paul Everitt, SMMT’s chief executive.

The trade body is meeting representatives from all three main political parties over the coming weeks, and presenting a position paper outlining how government-led measures can ensure investment in low-carbon technologies, research and development and the specialist training needed to decarbonise the sector.


The paper argues for reform of the large company research and development tax credit scheme and says the Green Investment Bank could play a key role in supporting the demonstration and deployment of new low-carbon technology.

It calls on the government to implement more initiatives to encourage the wider uptake of low-carbon vehicles, including exploring whether vans should be included in the government’s plug-in car grant scheme.

“The competition for high-value investment is intense and it is essential the UK does all it can to win its share,” says Everitt. “Targeted tax incentives and support programmes can help trigger the private sector investment needed to kick start growth.”

As the report was released, Jaguar Land Rover announced plans to build a new £355 million factory in Wolverhampton, which will manufacture low-emission petrol and diesel engines.

The SMMT paper is critical of recent government policy decisions, which it says are hindering the UK’s automotive sector’s ability to compete internationally, citing in particular the complexity of the Carbon Reduction Commitment Energy Efficiency scheme and the changes to the feed-in tariff, which it says has discouraged companies from adopting renewable energy technologies at their plants.

In a report published in March, the SMMT revealed that carbon dioxide emissions from new vehicles had fallen more than 20% between 2000 and 2010, but it warned that “only sustained and very direct support by governments to incentivise an increased rate of technology development, the roll-out of new infrastructure and greater consumer demand” could increase the pace of change.

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