Historically the Autumn Budget has always been anticipated by fleet owners. Motorists have always been seen as a soft target by the government and commercial drivers doubly so. This year, however, with the economy in a state of uncertainty owing to Brexit, the urgent need to do something about the quality of the UK’s air and with pressure mounting over climate change, drivers could be in for a bumpy ride come the 22nd of November…
In our latest blog, Coversure Hull, the fleet insurance specialists, look at some of the possible announcements that could affect fleet managers and offer some advice as to how to manage these changes.
Fleet Insurance Costs
If you’ve asked for a fleet insurance quote this year, you’ve doubtless noticed that the premiums quoted have been higher than in previous years. There are three main reasons for this, which are:
- Insurance Premium Tax (IPT) rises
- Changes in the Ogden Rate calculations
Let’s take each of these in turn, first off IPT. Unfortunately, the smart money seems to be on this rising… again! The present standard rate of 12% – up from 9% in 2015 – is likely to rise as the government needs money and this is regarded as an easy picking. If we’re lucky this jump may be held off until the Spring Budget but that’s far from certain despite it having already gone up this year. IPT increases are hated by the insurance industry as it’s us who get it in the neck from customers as they see their premiums going up. If it does change then our advice is to get your fleet insurance quote and renewal in early so you can at least postpone paying more.
Inflation has now hit 3% – a five year high – and this has prompted calls for the Bank Of England to raise interest rates, pressure on which grew sharply when the latest UK growth figures were better than expected. Such a rise could be a double whammy for fleet owners as insurers will seek to keep costs in line with inflation and increasing interest rates will make the cost of borrowing higher and add to pressure on their bottom line. While 3% inflation is still low and an interest rate change of ¼ of 1 per cent will still leave rates near the historic low, the underlying trend on both looks to be upwards. In the mid-term, therefore, fleet owners need to look for ways to reduce fleet costs such as the use of telematics and by switching to cheaper, more efficient electric fleets.
The Ogden Rate could bring some (much needed) good news, or at least the reversal of some of the awful news that March’s changes heralded. It’s already been reported that the government are considering moving the rate to between 0% and 1% and the Budget could bring some welcome news on this. Any confirmation on the rate’s increase could have a big impact on fleet rates.
2017 hasn’t been kind to diesel drivers and it looks more than likely that they will be subjected to further taxation through increases in fuel duty. Under significant pressure to reduce levels of air pollution, the government have waged war on diesel vehicles and have announced that they will be banned from our roads by 2040. With fuel costs back on the rise owing to troubles in Iraq and OPEC’s decision to cut production, any increase in fuel duty is not exactly helpful. Long-term the solution seems to be to go for electric fleets, though in the short-term the best thing to do is to reduce fuel consumption through the use of telematics, driver training, new vehicles and looking into hi-tech solutions – such as virtual meetings – to reduce overall mileage.
Much as the government hates diesels, its love affair with electric vehicles seems to be blossoming and we’re confident there will be more sweetheart deals for electric vehicles in the Budget. More electric vehicle subsidies, an extension of the scrappage scheme, more investment in charging infrastructure and more tax and other incentives for fleets to go green also seem highly likely.
Electric vehicles are good for the government on a number of levels; environmental, sustainability and as a way of creating a new car industry in this country, so it’s a trend that’s only going to continue. At Coversure Hull we’ve been monitoring the whole idea of electric fleets carefully for some time now, and with each passing year we’ve become more and more convinced of their feasibility and inevitability. Indeed, we are now seeing a steady stream of requests for electric car insurance, an increase that echoes the dramatic increase in the number of electric vehicles sold – 35,000 have been sold in the UK this year so far.
Salary Sacrifice Changes
This has been an area that’s been in a state of flux since the government announced changes to the rules around taxation in April, changes that led to a whirl of confusion. The central point, around how the new rules should consider only the amount sacrificed for the car itself and not any associated services such as maintenance, has now been clarified and this could well be set in stone in the Chancellor’s upcoming statement. The tax changes announced in April will leave most unaffected, but fleet owners must talk to their fleet providers to ensure they have the right vehicles on their lists.
What Does The 2017 Autumn Budget Hold For Fleet Owners?
Like most Budgets, this one will deliver a mixture of pros and cons and a lot will depend on your fleet’s size and make up. Those will older, higher polluting vehicles – such as those with grey fleets – are likely to be in for more expense. If you’re looking to invest in green technology then it’s likely to be a good Budget for you and those who are investing in telematics and other cost saving measures could also prove to be winners.
Like Some More Help?
Well we hope that’s given you some food for thought. If you’d like to know more about saving money on your fleet costs, or would like some help getting the fleet insurance cover that’s right for you, then please contact us. You can call us free on 0800 977 6037, email us by clicking here or get a no-obligation insurance quote here.
Coversure Hull is an independent fleet and business insurance specialist. From our base on the banks of The Humber, we offer comprehensive commercial vehicle cover, with particular focus on fleet and special types, alongside other essential business covers, namely commercial combined and liability.
Since opening in 2005, our combination of superb service and outstanding value for money business policies have established us as the insurer of choice for organisations both large and small.
Coversure Hull: We Mean Business
We have made it our business to protect your business. Whether you need fleet, landlord, liability or commercial combined insurance, we can offer you high quality cover from some of the UK’s leading insurers, all at highly competitive premiums that’s backed by our outstanding cover-to-claim service.
Contact Us Today
For a friendly independent service and great value cover, contact Coversure Hull today. You can call us on Hull (01482) 434343, for free on 0800 977 6037 or you can email us by clicking here.
We look forward to helping you with your requirements.
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