A UK representative automotive body has called for public investment totalling GBP20m (US$29.1m) to be maintained for the industry and any tax hikes be phased, ahead of the impending spending review.

The new coalition government in the UK is due to present an emergency budget to Parliament on 22 June and the Society of Motor Traders and Manufacturers (SMMT) has asked that money from the public purse continues to support the automotive sector, as well as staggering potential tax increases.

SMMT chief executive Paul Everitt has already had discussions with new UK business minister Mark Prisk and highlighted the fact that business secretary Vince Cable’s first official visit was to the Bentley production site.

“There are areas we want to see public money spent but we [also] want vocal support for the industry,” Everitt told just-auto. Although we recognise resources are limited, prioritisation of expenditure outlines the vocal support.”

Everitt noted there were key areas where public initiatives could play their part, for example in collaborative research and development, where the SMMT works with the Technology Strategy Board.

Squeezing ever greater efficiencies from conventional petrol and diesel engines was also an R&D priority, as was energy management and power electronics, while top end manufacturers equally had their role to play in ‘trickle down’ technology.

“It will be interesting to see if the more exotic models that Rolls-Royce has for engine development at high temperature combustion could be of benefit in some areas of alternative technology,” added Everitt.

The SMMT boss also called for any widely-anticipated increase in UK VAT – possibly to 20% from the current 17.5% – to be phased in rather than introduced at once, although given the parlous state of the UK economy, this may prove a difficult request.

“The emergency budget is on 22 June and we would prefer not to see any increase in VAT,” said Everitt. “If government decides it must, then we would like to ensure there is a gap so that we have time to adapt.

“We think the economic recovery is still fragile.”

Everitt also said R&D tax credits had been “top of the [political] discussions, particularly with the Conservative party while it was in opposition, although he stressed the SMMT had “extensive discussions” with all political parties before the election.

“We need to articulate quite clearly these are things we value,” he said. “We need to create an environment that encourages R&D.”

The SMMT chief executive underlined the importance of a favourable financial environment for manufacturers, given the UK is heavily reliant on overseas producers using British manufacturing sites.

“Because UK [automotive] companies are international, they could choose to spend money elsewhere,” he said. “Other regimes could look to provide either incentives or inducements.