We have already looked back at the year that’s been But what about the year that’s on its way? 2022 promises a lot for fleets and motorists to grapple with. We’ve picked out five key things to look out for.
1. What’s happening with Fuel Duty…
Of course, in the short term, we know perfectly well what’s happening with Fuel Duty. In his Autumn Budget, perhaps mindful of the sky-high prices at the pump, Rishi Sunak announced that it would be frozen at 57.95 pence per litre for the 12th year in a row – until at least April 2023.
But there’s a bigger question surrounding Fuel Duty in the medium-to-long term: what will the Chancellor do about the lost revenues as more and more motorists jettison petrol and diesel altogether, and get into electric vehicles? In fact, the Tony Blair Institute has calculated that the Exchequer stands to lose about £30 billion by 2040.
Fundamentally, this means that – in time – the government will need to find some way of raising money from EV drivers, too. Some have suggested measures such as Road Pricing, i.e. charging all road users for travelling on particular stretches of tarmac.
The reason we mention this is because the question was asked of the government in 2021. A spokesman for Boris Johnson responded: “We need to ensure that the tax system encourages the uptake of electric vehicles and that revenue from motoring taxes keeps pace with that change. We will set out our further plans in due course.”
However, despite much speculation and anticipation, those “plans” were not featured in the Autumn Budget. Which means that they could be due in 2022…
…or at least a long process could start in 2022. Given that this would be such a significant change to the way motoring is taxed, it is likely that the government will conduct a full review, potentially lasting years from start to finished legislation.
2. …and other motoring taxes?
Fuel Duty isn’t the only motoring tax on the government’s to-do list. We are still waiting for a number of potential changes to Vehicle Excise Duty (VED), following announcements by different Chancellors. Back in 2018, Philip Hammond embarked on a consultation to discover how VED could better encourage the uptake of cleaner vans. And then, in 2020, Sunak did likewise for cars. Neither of these processes have resulted in any legislation – yet.
In fact, if we look beyond motoring taxes, we are still waiting for the government to announce the outcomes of a number of other reviews. For example, in the summer, they launched consultations into the possibility of a ZEV Mandate – that is, a requirement for vehicle manufacturers to sell a certain proportion of zero-emission vehicles – and also into which types of hybrid vehicles should be allowed to remain on sale after 2030 and until 2035.
Of course, some reviews do just… fizzle out. We shouldn’t necessarily expect to have all these policy questions resolved soon. But the fact remains: there are several legislative interventions that the government is due to make along the Road to Zero – and some of them could come in 2022.
3. Changes to electric grants
There is one policy change coming in 2022 that we do know about now. From April 2022, the Electric Vehicle Homecharge Scheme – which currently offsets 75% of the cost of installing a charge point at home, up to a maximum of £350 – will no longer be available to homeowners in single-unit properties, but will instead be refocused on “leaseholders, renters and those living in flats”. The government has also confirmed that the EVHS, in this new form, will be funded until at least 2024/25.
There are changes to other grants, too. The Office for Zero Emission Vehicles (OZEV) has cut funding levels and changed the eligibility criteria for the Plug-in Vehicle Grants (PiVG) – aimed at targeting the most affordable vehicles and stretching the already-allocated funding.
4. More Clean Air Zones
Clean Air Zones (CAZ), areas where special action is taken to reduce emissions from road transport, really took off in 2020. As we said in our review of the year, not only did London expand its Ultra Low Emission Zone to the North and South Circular Roads, but Bath, Birmingham and Portsmouth also introduced their own CAZs.
More CAZs are expected in 2022. For example, Bristol is awaiting final sign-off for a small CAZ in the city centre that would impose a £9 daily fee on cars and vans that do not meet minimum emission standards. Greater Manchester has earmarked 30 May for its own CAZ, although cars will be exempted from any charges. And there are also plans afoot in Bradford, Sheffield, Oxford and other cities.
Of course, the rise of CAZs – each with their own standards, charges and other measures – means that the country is going to become a sort of legislative patchwork in the years ahead. Fleets will need to be prepared for the effects wherever they operate.
5. The pandemic – and its effects – won’t be over
We don’t want to end on a down note, but it is important to note that Covid-19 has not gone away – and neither have its effects on economics and supply chains. The semiconductor shortages that have affected vehicle production and delivery in 2021 are, according to many manufacturers, going to persist in 2022.
Of course, LeasePlan UK is in constant contact with manufacturers about the situation – and with our customers, too. If any of your orders are likely to be affected, then we are here to talk through all the options.
Which just leaves us to say one more thing. Overall, 2021 was better than 2020, and we hope that 2022 continues the trend. Happy New Year!