Rachel Reeves’ “ambiguous” 2025 Budget has been slammed for offering “little real world support” for garages and the wider automotive industry, despite changes to apprenticeship funding and clarity on government plans for EV mileage charging being among the major announcements made.
“While making under-25 apprenticeships free for SMEs is a step in the right direction,” said IGA Director Jonathan Douglass, “the rest of the Budget feels ambiguous and offers little real-world support for independent garages.” He continued: “The negative impact of EV pay-per-mile proposals, rising operational costs, and higher taxes on savings and dividends create yet more challenges. The Government must commit to clearer, more supportive measures.” Alongside the 3 pence per mile charge for EVs and 1.5 pence per mile charge for plug-in hybrids, the Chancellor also announced that the price threshold for EVs on the Expensive Car Supplement (ECS) will increase £40,000 to £50,000 in April 2026. At the same time, an additional £300m in funding was added to the Electric Car Grant. An extra £200m was also earmarked for EV charging infrastructure, in combination with 100% business rates relief for EV charger installations being offered.
Looking at internal combustion engine vehicles, the current freeze on fuel duty rises will continue, but this is slated to end next September. More generally, the national minimum wage is also set to rise by 4.1%, along with other changes to pay being enacted including higher apprentice pay.
Pivotal moment
According to IAAF Chief Executive Mark Field, while the Chancellor’s has made headline-grabbing announcements around EVs in the Budget, she missed the opportunity to enhance the invaluable contribution made by the UK aftermarket: “This is significantly the largest element of the UK automotive sector, and the budget does nothing to support the thousands of businesses that deliver affordable mobility to the millions of motorists every day.”
Taking a positive stance, GSF CEO Steve Horne said that the mileage-based fee for EVs was a game changer: “The introduction of a mileage-based tax for electric vehicles from 2028 is a pivotal moment for the UK automotive market. While designed to address falling fuel duty revenues, the OBR’s forecast of 440,000 fewer EV sales over five years signals a slower transition to electrification. For the aftermarket, this means ICE vehicles will remain on the road longer, creating sustained demand for traditional parts and maintenance.”
Significant step
IMI CEO Nick Connor said the major story for the automotive sector was the unveiling of free apprenticeships for under 25s based within SMEs: “This is a significant step for a sector where 96,000 small and medium sized businesses play such a critical role. The IMI has continually raised with government the difficulties SMEs face in navigating the Levy system, so this is an incredibly welcome move. We were also encouraged by the announcement made before the Budget that the minimum Apprenticeship Pay will rise to £8 per hour from April next year. This undoubtedly will also help with attracting young people to apprenticeships.”
Autotech Group CEO Simon King also welcomed the changes to apprenticeships and training funding, but believes Government could have gone further: “While the reforms announced gesture towards greater flexibility, they stop short of providing the targeted measures the aftermarket requires. The lack of ring-fenced support for automotive training and the absence of a clear commitment to EV-technician development remain significant gaps.”
On EV mileage charging, he added: “Although near-term incentives for EV purchase remain, the longer-term tax signal risks dampening adoption at a key moment in the transition, which in turn could affect the pace at which the aftermarket prepares its workforce.”
Strategic importance
Commenting on the decision to include automotive among of the major recipients of a £1.5 billion funding package, SMMT Chief Executive Mike Hawes said: “Government has recognised the automotive industry as a pillar of national strategic importance, backing it with an industrial strategy and additional £1.5 billion to drive competitiveness and investment.”
He added: “Changes to the VED expensive car supplement are welcome, as is the additional £1.3 billion funding for the Electric Car Grant and support for charging infrastructure. These will help, but will not offset the impact of introducing a new electric-Vehicle Excise Duty – the wrong measure at the wrong time.”
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