Chancellor Rachel Reeves has delivered her first budget since Labour took government. The measures announced offer a mixed bag for the aftermarket, with good news for industry investment, but blows for small businesses.
Here is some of the reaction from around the industry.
IMI highlights mixed budget feelings
The IMI is delighted that the Chancellor has, today, acknowledged the importance of automotive in the industrial strategy in the Budget with a £2 billion commitment for the sector, supporting the growth of the electric vehicle parc. The IMI believes it is critical that a share of this commitment is allocated to training and continuous professional development for those working both inside and outside the factory gates, alongside manufacturing infrastructure.
The professional body for people in automotive also welcomes the government’s commitment to further education with a £300 million increase in funding as well as the increase in Employment Allowance – to £10,500 – for the smallest employers.
The IMI is, however, disappointed by the much-rumoured increase in employer NI contributions from April 2025, combined with a reduction in the secondary threshold to £5,000 pa. These changes are likely to have a significant impact on costs for small businesses that operate in the automotive sector, which is already facing a skills gap of 20,000+ vacancies.
These additional costs are likely to dampen investment in training and continuous professional development and impact the ability of the sector to be ready to support the government’s decarbonisation targets.
The IMI will continue to provide its members with a voice and represent their interests with government. It will also be responding to the government’s Industrial Strategy green paper ‘Invest 2035: The UK’s Modern Industrial Strategy’, and is urging its members to have their say in a forthcoming webinar.
Easy2Recruit supportive of funding
In her first Budget as Chancellor of the Exchequer, Rachel Reeves announced the £2 billion investment as part of the government’s modern industry strategy. “This funding will be vital to help the sector move towards full electrification, but it is only part of the answer for the skills crisis,” said Easy2Recruit founder and CEO Ambi Singh.
Further support for education was also part of the mix, including a £300 million investment in further education. “For the sector to be able to support the growing EV car parc,” said Singh, “what will count in the long term is continuing investment in training, and measures to encourage more young people to enter the sector, making this a step in the right direction.”
An increase in the minimum wage for over-21s was announced in the Budget too, which will go up from £11.44 to £12.21 per hour from April. At the same time, the hourly rate for 18 to 20-year-olds will go up from £8.60 to £10. Meanwhile, Employment Allowance, which enables small companies to reduce their National Insurance liability, will rise from £5,000 to £10,500. “While garages will need to pay some staff more, there is some good news too with Employment Allowance going up too,” said Ambi.
“Ultimately, this reflects the reality that the sector will need to invest in growing the next generation of techs at a much higher rate than has been the case in recent years if it wants to close the skills gap,” Singh added.
GSF Car Parts committed to growth
“Following the announcement of the 2024 Autumn Budget today, it is important to understand what this means to the wider automotive industry,” GSF Car Parts CEO Steve Horne commented.
“Looking at ramifications for the automotive industry, the government has announced a significant investment of over £2 billion specifically for the automotive sector, as part of its broader ‘modern industrial strategy’ aimed at unlocking growth in key industries.
“This funding is expected to enhance supply chain resilience, crucial not only for GSF Car Parts as a parts distributor but also to our partners who are suppliers and manufacturers. This should encourage the improvement in logistics and support domestic production capabilities.
“At GSF Car Parts, we are excited about this commitment, especially as we have experienced a year of growth as we currently employ 3,000 people across the UK. This investment detailed in the Budget aligns with our mission to provide quality products and services while contributing to a healthy automotive future for the industry.”
SMMT disappointed
“The Chancellor is right to set out measures to address the deficit while investing for future growth,” commented Mike Hawes, Chief Executive of the SMMT, following the Budget announcement. “The automotive industry is a growth-driving sector, fundamental to the delivery of the country’s net zero ambitions. We therefore welcome today’s commitment in the Budget of £2 billion of automotive transformation funding as part of the government’s modern Industrial Strategy.
“Delivering that strategy depends on the UK being globally competitive. Additional National Insurance Contributions will put massive pressure on the automotive supply chain which is predominantly SMEs. Next year’s spending review must find resources to fund measures that alleviate the strain on these companies and help them transition to an electrified future.
“A strong manufacturing sector depends on a strong market. The lack of substantive measures to support the new car market, in particular for electrified vehicles, is hugely disappointing.
“We welcome the extension of the Plug-in Van Grant and company car tax benefits in the Budget, but these alone cannot drive the growth in demand needed. With the sector challenged to deliver the world’s most ambitious EV transition targets, achievement of those targets is in serious doubt. There must be an urgent review of the market and regulation, else the cost will soon be felt in reduced UK investment, economic growth and jobs.”
RAC happy with roads funding
Following the Budget decision by the Chancellor to provide local authorities with £500 million to help improve local roads, RAC head of policy Simon Williams said: “This is positive news for drivers as it should enable cash-strapped local authorities to begin the process of improving the quality of their roads.
“But it is vital councils don’t just use the money to fill potholes as this is unlikely to deliver the long-term benefit drivers so badly want to see. We believe greater use of preventative maintenance is essential. Surface dressing roads at regular intervals is a proven, cost-effective way of ensuring potholes do not appear in the first place, along with resurfacing the worst affected roads.”
