News Analysis

Sting in the tail

Government cuts plug-in grant after Sunak’s budget extends fuel duty freeze while Furlough and SEISS schemes continue, prompting accusations of inconsistency

There was a sting in the tail for the motor industry following a relatively tame Budget. Pointedly missing from the annual fiscal statement was any real mention of government policy on electric cars.

Eyebrows were raised – and with good reason, as just a couple of weeks later, the sting in the tail was delivered not by the chancellor, but by Transport Secretary Grant Shapps, who announced, to widespread criticism, a cut in the Plug-in Car Grant, the Governmentbacked incentive programme designed to get motorists to switch to electric cars and vans.

The move prompted widespread redrawing of EV prices by manufacturers such as Nissan, Vauxhall, Peugeot and Hyundai, after the Government slashed the PiCG from £3,000 to £2,500 and making it available only for EVs costing up to £35,000.

The DfT claimed more than half of EVs currently on sale would remain eligible for the grant, with the proportion of models costing under £35,000 almost doubling since 2019.

This provoked an angry reaction from the industry. The RAC’s head of roads policy Nicholas Lyes said: “Ministers seem to talk-the-talk when it comes to encouraging people into cleaner vehicles, but cutting the plug-in car grant certainly isn’t walking the walk.”

SMMT chief executive Mike Hawes said the government’s decision was “the wrong move at the wrong time”, adding: “New battery electric technology is more expensive than conventional engines and incentives are essential in making these vehicles affordable to the customer.”

“Cutting the grant and eligibility moves the UK even further behind other markets, markets which are increasing their support, making it yet more difficult for the UK to get sufficient supply.”

The DfT said in a statement that the reduction was intended to “target less expensive models and reflect a greater range of affordable vehicles available”, spreading subsidies further and helping more drivers switch to EVs.

The SMMT called for bigger rather than smaller incentives. Private buyers in Germany receive a €€9,000 grant towards a new EV, while Dutch drivers do not pay VAT on EV purchases, equivalent to a purchase cost saving of around a sixth.

The SMMT estimates that maintaining the PiCG at the old level and exempting consumer electric vehicle purchases from VAT would increase uptake by almost two-thirds by 2026 compared to current predictions.

MOTORING ISSUES IN THE BUDGET

Earlier, Chancellor Rishi Sunak’s Budget included a freeze on fuel duty and an extension of job support schemes set up

to counter the effects of the Coronavirus pandemic.

The freeze on fuel duty charged on petrol and diesel sales has now been in place for eleven years, and Sunak said it would not be right to increase the tax during the coronavirus pandemic.

The move has been welcomed by motoring associations. RAC’s Nicholas Lyes said: “Drivers will breathe a sigh of relieve that the Chancellor has decided not to ‘rock the fuel duty boat’. We feared this would only pile further misery on drivers at a time when pump prices are on the rise and many household incomes are being squeezed as a result of the pandemic.”

He continued: “If the Chancellor had raised fuel duty, he could have risked choking any economic recovery as it would have led to increased costs for consumers and businesses.”

Howard Cox, Founder of FairFuelUK and secretary for the All-Party Parliamentary Group for Fair Fuel, said: “Motorists will be pleased at this protracted decision from the Chancellor. They will hope this is just the start of more pro-motoring policies, which have been sadly lacking in this Parliament.”

Future fuel duty rates will be considered in the context of the UK’s commitment to reach net-zero emissions by 2050, the government said.

The budget was light on detail on motoring issues. Sunak has decided to leave insurance premium tax unchanged, while there was no further commitment to road repairs beyond the 2020 Budget commitment of £500 million a year in pothole repairs over the life of the parliament, and only one new road upgrade was mentioned, a £135m upgrade of the A66 trans-Pennine road.

Vehicle Excise Duty was also not mentioned, but VED rates for cars, vans and motorcycles will be increased in line with the retail price index from April 1, 2021. From April 6, 2021, fuel benefit charges and the van benefit charge will increase in line with CPI.

EMPLOYMENT ISSUES AND COVID-19 HELP

The Coronavirus Job Retention Scheme – better known as the Furlough scheme – which was scheduled to finish at the end of April, will be extended until the end of September, chancellor Rishi Sunak announced.

And the Self-Employed Income Support Scheme will also continue, with fourth and fifth grants available to cover the period until the end of September.

Employees on furlough will continue to receive 80% of their salary for hours not worked, up to £2,500 per month, until the scheme ends. However, from July employers will be asked to contribute more to the scheme. Between now and the end of June, the state will pay 80% of wages for hours not worked, while employers will only be asked to cover national insurance and employer pension contributions.

But in July the state will only pay 70%, with employers asked to pay the remaining 10%, and in August and September the state will pay 60% and employers will have to pay 20%. The scheme is otherwise unchanged.

The extension to the SEISS is more complicated, and it will now be offered to some people who were not previously eligible.

The fourth SEISS grant will be worth 80% of trading profits for three months, capped at £7,500. The grant, which is supposed to cover February, March and April, will be worth 80%. Applications will open in April.

More than 600,000 newly self-employed people will now be eligible to apply. While previously you must have filed a tax return for 2018-19 to apply, those who have filed a 2019-20 return may also be eligible.

As with previous SEISS grants, applicants must state they are either be currently trading but are impacted by reduced demand due to coronavirus; have been trading but are temporarily unable to do so due to coronavirus; intend to continue to trade; and reasonably believe there will be a significant reduction in your trading profits due to reduced business activity.

A fifth SEISS grant, available from late July, will cover the May to September period, but its value will be linked to a change in turnover. If the applicant’s turnover has fallen by 30% or more, they will be able to claim the full grant worth 80% of three months’ average trading profits, capped at £7,500.

But if turnover has fallen by less than 30%, the applicant will only be able to claim a grant worth 30% of three months’ average trading profits, capped at £2,850. It is not clear over which period the turnover change will be calculated.

Sunak’s Budget: short on detail for motoring issues

TAXATION AND OTHER CHANGES

Elsewhere, a £20 uplift in Universal Credit worth £1,000 a year will be extended for another six months, Sunak announced. And Working Tax Credit claimants will receive a £500 one-off payment. The chancellor also said the Minimum Wage would increase to £8.91 an hour from April.

There are no changes to rates of income tax, national insurance or VAT. The Income Tax Personal Allowance will be frozen at £12,570 from 2022 to 2026, and the higher rate income tax threshold will also be frozen at £50,270 over the same period.

However, Corporation tax on company profits will rise from 19% to 25% in April 2023. The rate will be kept at 19% for about 1.5 million smaller companies with profits of less than £50,000.

Stamp duty holiday on property sales will be extended to June, with no levy on sales of under £500,000. No changes have been made to inheritance tax or lifetime pension allowance or capital gains tax allowances.

More questions than answers

The Supreme Court’s decision that Uber drivers are “workers” leaves unanswered questions on drivers’ pay and freelance status within the gig economy

UBER’S DECISION TO CHANGE ITS BUSINESS MODEL AND give benefits such as minimum wage, holiday pay and pensions to its drivers appears to have given the ride-hailing giant a first-mover advantage in the sector.

And the decision to change its employment terms means Uber appears to have complied with most – but not all – of the recent Supreme Court ruling that its drivers are “workers” rather than selfemployed contractors.

Uber will also be contacting drivers in coming days with “settlement offers” to make up for shortfalls in past pay – which is likely to be a bill running into hundreds of millions of pounds. Earlier speculation had suggested a sum of £12,000 per driver might be owed.

But the decision, which was hailed by the GMB Union but criticised by the IWGBbacked App Drivers and Couriers Union, which brough the initial case against Uber, still leaves much unanswered.

In particular, Uber is only proposing to pay its workers from the time they accept a job to completion, and not for waiting time, The court ruling had stipulated that the “worker” was working from the moment the driver turned on the app and was available to take on jobs.

However, with many London Uber drivers also signed up to other ride-hailing services such as Bolt, Ola and FreeNow, the question remains as to who would be responsible for paying them while they are waiting, with a number of apps turned on, for a job from any of the companies.

Industry consultant Dr Mike Galvin, who works for Bolt, said the ruling, and Uber’s subsequent decision, might not be in the drivers’ interest. “It’s a solution

UBER’S NEW DEAL: driver benefits in full

n When driving with Uber in the UK all drivers will receive: n At least the National Living Wage after accepting a trip request and after expenses. On average, drivers earn £17 per hour in London and £14 in the rest of the UK on the same basis when driving on Uber. n All drivers will be paid holiday time based on 12.07% of their earnings, paid out on a fortnightly basis. n Drivers will automatically be enrolled into a pension plan with contributions from Uber alongside driver contributions, setting drivers up over the long term. n Continued free insurance in case of sickness or injury as well as parental payments, which have been in place for all drivers since 2018. n Continued support from Uber’s Clean

Air Plan in London, which has so far raised over £120m for drivers switching to an electric vehicle. n All drivers will retain the freedom to choose if, when and where they drive. looking for a problem,” he said. “It’s not mission impossible to work out how to apportion waiting time among companies, but it’s pretty clear that a driver with three or four apps on the go is definitely an entrepreneur, not a dependent contractor.”

Galvin believes the majority of drivers do not want to be considered as “workers” and prefer the flexibility of self-employment, though he wondered whether the effects of the Coronavirus pandemic might have changed attitude.

“I don’t believe there is any appetite for worker status among private hire drivers, though it is possible that Covid has changed things, and drivers might prefer to have some employment protection,” he said.

Uber said it had consulted “thousands” of its drivers over the changes, which are now in force, and the drivers said they wanted these additional benefits “but without any loss of flexibility”.

The changes affect more than 70,000 drivers in the UK who have signed up to the Uber app. All – whether in London or elsewhere - will be treated as workers, earning at least the National Living Wage “when driving with Uber”.

In a statement, Uber said this was “a floor and not a ceiling, with drivers able to earn more, as they usually do”. Drivers will be paid for holiday time, and those eligible will be automatically enrolled into a pension plan.

“This means drivers will earn with greater security, helping them to plan for their futures while maintaining the flexibility that is integral to the private-hire industry,” said Uber’s statement.

By moving quickly, Uber is now calling on the rest of the private hire sector to follow suit. Jamie Heywood, Uber’s regional general manager for northern and eastern Europe, said: “Uber is just one part of a larger private-hire industry, so we hope that all other operators will join us in improving the quality of work for these important workers who are an essential part of our everyday lives.”

The response is likely to be mixed. Uber had argued that the Supreme Court ruling affected only the 25 drivers named in the original 2016 Employment Tribunal case, and its decision to change the status of all its drivers to “worker” is a way of heading off a number of further scheduled court cases on the same issue.

The other ride-hailing app companies, including Bolt, Ola, FreeNow and Via, have yet to respond. Likewise, large fleets such as Addison Lee, which operate a different business model, will also take a stance. It is clear that the Supreme Court ruling does not automatically make all private hire driver workers.

Indeed, Uber has excluded Uber Eats delivery drivers from the new arrangements, and the rest of the gig economy – from food delivery drivers to couriers and other “freelance” workers – are likely to have to fight individual court battles on the worker status issue. Courier firm DPD offered its drivers the opportunity to become “workers” in 2018.

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James Farrar, the former Uber driver who brought the case against Uber in 2016 and now runs the App Drivers and Couriers Union, said minimum wage, holiday pay and pensions were a step in the right direction but drivers were still being shortchanged. Farrar maintained drivers should accrue minimum wage and holiday pay from when they log in not just from when a trip is accepted, saying about 40-50% of drivers working time was still not being paid or protected.

“If you go to work for Starbucks and no customers come into the shop should you still be paid, of course you should,” Farrar said. Uber simply has to do this, this is not difficult to understand. Waiting is working. This is a step in the right direction but we are not there yet.”

The GMB is also claiming victory: “It’s a shame it took GMB winning four court battles to make them see sense, but we got there in the end and ultimately that’s a big win for our members,” national officer Mick Rix told reporters.

“Uber’s announcement should mark the end of the road for bogus self-employment,” Rix continued. “GMB’s battle with Uber now opens the door for workers, and their unions, to win the fight for better pay and conditions at companies across the gig economy.”

Matthew Taylor, author of the Government-funded Taylor Report into the gig economy, called on the government to introduce legislation to clarify the grey area of employment status for gig workers at all companies.

He supported the Uber decision, but added a note of caution, telling the Evening Standard: “On balance it is better that people have worker status and lose some flexibility, but some people will not agree.”

In the longer term, the decision could accelerate a move away from direct driver recruitment and toward greater use of its recently-acquired dispatch system provider Autocab’s technology. In particular, Uber announced last year it planned to use Autocab’s iGo platform to give Uber jobs to private hire operators in towns where Uber is not present.

Doing this takes Uber out of the employment equation, as the drivers would be employed by local operators that agree to take on the work. It looks likely that Uber will move away from direct recruitment outside London, though it is so well entrenched in London with a direct recruitment model that that is unlikely to change.

Jamie Heywood, Uber Regional General Manager for Northern and Eastern Europe

Police to eject Uber drivers from York in cross-border crackdown on app giant

Uber drivers attempting to pick up bookings in York are likely to be escorted from the city by Police, as the city looks protect local operators. The move is likely to give Uber further reason to shift its focus from direct operations to use of the iGo platform, acquired through the Autocab deal.

Doing so would effectively remove Uber as an operator – and any jobs booked via the Uber app in York would be handled by a local company that was on the Autocab/iGo platform.

York is one of a number of councils that has taken a hard line against ride-hailing. It removed Uber’s operator’s licence in December 2017 when the City of York council gambling, licensing and regulatory committee voted by seven to three, with two abstentions, not to renew it. But Uber drivers registered in other cities, such as Leeds, have been operating in the city.

Now, following meetings between the York Private Hire Association and North Yorkshire Police, the police looks set to crack down on out of town Uber drivers in the city.

Police now argue that as Uber doesn’t hold a local licence for York it is breaking the Local Government (Miscellaneous Provisions) Act 1976 (Section 46). This states: “No person shall in a controlled district operate any vehicle as a private hire vehicle without having a current licence under section 55 of this Act.”

Wendy Loveday, the chair of the Private Hire Association, said it means that Uber drivers from out of town should not be picking up fares in the city because they do not hold a proper licence to work in York.

According to local reports, police officers will be briefed to engage with any Uber driver, or other out of town operators’ drivers, that they suspect to be breaching Section 46 of the 1976 legislation, and will ask them to leave York immediately.

Loveday claimed Uber could legally bring a customer into York, but cannot pick up in the city – so the car would have to return to its licenced area empty. A North Yorkshire Police spokesman said: “North Yorkshire Police is working with City of York Council on this matter, as taxi licensing and licensing enforcement sits with local authorities rather than the police.”