The hugely increased burden that the Budget places on remarketing businesses means that Labour’s growth strategy must succeed, says the Vehicle Remarketing Association.
Philip Nothard, VRA chair, said that moves such as the increase in Employers’ National Insurance and high minimum wage would have an impact on costs for almost every business involved in the sector.
“It’s arguable that people elect a Labour government in the expectation they will increase taxation to fund higher spending on public services. What feels unusual in this Budget is both the sheer amount – £40bn is undoubtedly a lot of money – and the degree to which businesses are being asked to foot the bill.
“Remarketing remains a people-intensive sector and the cost of employment will go up quite substantially as a result of moves such as higher Employers NI. For major dealer groups, that alone could easily mean an increase approaching seven figures.
“This places pressure on remarketing businesses to either grow or cut costs. If the Labour government can deliver on its investment promises, perhaps this higher tax burden will be absorbed but the growth figures mentioned by the chancellor were only moderate, and cost reduction looks like much the more likely solution.”
The VRA welcomed a range of other government measures included in the Budget, Philip added, including the £500m allocated to potholes and £2bn to be spent on the zero-emissions vehicle manufacturing sector and supply chain.
“There are quite strong signs that the Labour government ‘gets’ the motor industry and wants to play a positive role in supporting everyone from manufacturers to motorists, but they have very much now created a situation where if they want to benefit from the increase tax burden, they need to deliver on their growth promises.
“Keir Starmer has repeatedly said that he wants to be judged by results and that should be as true in the remarketing sector as elsewhere. If we don’t see sustained, strong growth throughout this Parliament, questions will undoubtedly be asked.”