Chancellor Rachel Reeves delivered her Spring Statement today, outlining downgraded growth forecasts and fiscal measures, but offering little clarity for the motor finance sector. While the government remains committed to long-term economic stability, industry leaders warn that the lack of targeted support could slow fleet decarbonisation and hinder electric vehicle (EV) adoption.
Reeves told MPs that “the world has changed” since her first budget last October, attributing economic revisions to shifting global conditions. The Office for Budget Responsibility (OBR) has halved the UK’s 2025 growth forecast from 2% to 1%, while projecting output growth of 1.9% in 2026, 1.8% in 2027, 1.7% in 2028, and 1.8% in 2029.
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Despite short-term challenges, Reeves announced plans to transition from a £36.1bn deficit in 2025-26 to a £9.9bn surplus by 2029-30. She reaffirmed there would be no new tax increases, focusing instead on measures to combat tax evasion and increase revenue.
Motor finance industry reaction
Industry leaders have expressed concerns that the Spring Statement failed to provide the policy certainty needed to accelerate EV adoption and fleet decarbonisation.
Toby Poston, Chief Executive of the British Vehicle Rental and Leasing Association (BVRLA), criticised the government’s lack of action on electric vehicle incentives. “Electric vehicle registrations have never been higher, but the fleet and mobility services sector’s confidence in a fast, fair and affordable net zero transition is wobbling. Today’s Spring Statement failed to acknowledge or address the uncertainty and lack of confidence surrounding the electric vehicle market.”
David Bushnell, Director of Consultancy and Strategy at Fleet Operations, described the statement as a “missed opportunity” for the fleet sector. “The government needs to provide the long-term support businesses require to invest in fleet decarbonisation. While the Department for Transport’s recent extension of the Plug-in Van Grant was welcome, broader, joined-up policy is needed to create real momentum.”
Bushnell also raised concerns over the withdrawal of the Vehicle Excise Duty (VED) exemption for electric vans from April 2025, which will align them with petrol and diesel models. “This sends a mixed and unhelpful message to operators who have already committed to cleaner transport,” he said. “Treating 4.25-tonne electric vans as HGVs continues to undermine progress.”
Iain Reid, Head of Editorial at Carwow, echoed these concerns, particularly regarding the ‘Expensive Car Supplement,’ which imposes an extra £410 annual tax on EVs priced above £40,000. “This undermines the in-life savings that make EVs attractive and risks pushing drivers towards cheaper petrol models instead,” he said. “It’s a huge oversight that this unnecessary tax was not addressed in today’s statement.”
John Cassidy, Director of Sales at Close Brothers Motor Finance, highlighted the freeze on fuel duty as one of the few positives for motorists. “The Chancellor reconfirming her pledge to extend the freeze of fuel duty, as well as the temporary five pence cut, until March 2026, will offer a glimmer of relief to motorists concerned about the soaring cost of driving. However, the government must do more to ensure fuel price reductions reach consumers.”
Sue Robinson, Chief Executive of the National Franchised Dealers Association (NFDA), noted that the Spring Statement provided no updates on the transition to electric vehicles. “The government needs to be incentivising consumers to purchase a new vehicle, which will drive growth in the UK economy,” she said. “There were missed opportunities in today’s announcement to use the automotive sector to stimulate economic growth.”
Matt Walters, Head of Consultancy Services and Customer Value at Ayvens, provided further insights into the impact of VED changes on motorists and fleets. “The lack of big announcements in the Budget effectively confirms some incoming changes to vehicle excise duty (VED) – effective from 1 April 2025. Most vehicles won’t see large tax hikes, but electric cars and vans will now be taxed at the same rate as their petrol and diesel counterparts.”
Walters also criticised the continued application of the ‘Expensive Car Supplement’ to electric vehicles. “The threshold was set in 2015, when it was expected to affect only 5% of registrations. Today, around 64% of EVs are priced over £40,000, making this tax disproportionately impact electric models. The Autumn Statement promised a review, but with just days to go before these changes take effect, the Treasury has yet to act.”
He further highlighted concerns about electric vans, estimating that VED changes could add a £31m tax burden on businesses next year. “With the UK’s electric van market already struggling to gain traction, this additional cost burden feels premature and risks slowing adoption further.”
