cfc solutions, March 2007 Budget response

Andrew Leech, business leader, cfc solutions

The changes in vehicle excise duty are interesting and will give fleets pause for thought. When band G, for the highest polluting vehicles, becomes 400 a year, there will be a very clear difference between the VED being paid for the majority of fleet vehicles, which fall into D and E, and the highest polluters.

Over the course of a typical fleet life cycle, the whole life cost of a band G car will be 600 or more higher in VED alone than a band D or E model. This is starting to become the kind of figure that could prompt companies to consider whether they offer these vehicles on their choice lists at all. It is a substantial differential.

Another consideration is that these higher polluting vehicles are clearly being labelled by the Government as íunacceptableí in environmental terms. Companies will have to consider whether they want their directors to be seen motoring around in 4.0 litre 4x4s. It is now widely perceived that these vehicles simply project the wrong image.

The further support for biofuels, with the duty discount extended to 2010, is a signal that this is now probably the Governmentís preferred green fuel choice for the future and perhaps also an acceptance that other alternative fuels are not going to catch on in any meaningful manner in the medium term at least. However, with the biofuel mixes available at the pump now only running to 5% of the overall fuel content at the pump, this could be seen as a policy that is at least a little lacking in ambition.

The benefit in kind incentive that has been announced for April 2008 to draw company car drivers towards 85% high mix biofuels is something of an unknown quantity. Currently, none or few cars available can run on the mix. The question is whether manufacturers can produce them and fuel companies can make them widely available.