Spring Statement “does little to ease very real cost pressures” being faced by aftermarket

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The Spring Statement from the Chancellor of the Exchequer did “little to ease the very real cost pressures” being faced by businesses in the automotive aftermarket, just as higher minimum wage considerations, which are set to rise again next month, continue to exacerbate ongoing staff shortages across the sector.

The forecast from Rachel Reeves provided an update on the UK’s economic outlook: expected growth was downgraded and it was revealed that unemployment is set to peak later in the year, before falling over the course of the current Parliament.

However, according to Independent Garage Association (IGA) director Jon Douglass, the Statement failed to address the issues businesses face as they try to stay profitable as they deal with a host of challenges, including energy costs, increased tax burdens and more: "While today’s Spring Statement did not introduce new measures directly affecting independent garages, it does little to ease the very real cost pressures our members continue to face."

Higher National Minimum Wage and National Living Wage requirements are among the factors adding further pressure. With rises confirmed to kick in on 1 April, businesses will face an even greater burden, and this is affecting recruitment as Emma Carrigy, head of research, policy and inclusion for the Institute of the Motor Industry noted: "Discussion around minimum wage policy has been increasingly framed as a simple trade-off; higher pay for workers or lower costs for employers. For the automotive sector, dominated by small and medium-sized businesses navigating electrification, skills shortages and rising operating costs, that binary framing risks overlooking a more important question. The automotive sector is not just trying to manage costs but facing a mammoth challenge to attract and retain talent.

"We would, therefore, urge the Chancellor to rethink how the increase could be implemented to ensure that rising pay also strengthens participation, productivity and long-term workforce resilience. For technical sectors like automotive, we believe a more constructive and targeted approach could be taken that would support both workers and employers."

On how this could be achieved, Carrigy suggested: "Targeted NI reductions for young workers or apprentices in shortage occupations could offset rising wage floors while maintaining recruitment incentives. Aligning wage reform with training support or levy flexibility could help ensure wage increases strengthen rather than weaken the skills pipeline. Structured pay progression could be tied to recognised training milestones, ensuring wage increases reflect developing technical competence."

With the Spring Statement now framed as an opportunity for the Chancellor to provide an financial update, she will unveil new spending plans in the full Budget in the Autumn.