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Budget 2017, AA response

Pump relief for drivers

Motoring-lite budget brings pump relief but with missed opportunities to help remove the burden on young drivers

8 March 2017

The AA is pleased that the Chancellor has not increased IPT in this budget. However, motorists will need to brace themselves for the previously announced rise to 12% from 1 June, completing a 100% increase within two years.

This is unprecedented in modern tax history but we're glad the Chancellor has put a stop to further increases. We are though disappointed that there is no reduction in IPT for young drivers who are being priced out of their cars.

Suspending IPT for young drivers using telematics policies was ignored but this would have made insurance more affordable for the most responsible young drivers who are happy to have their driving monitored – thus reducing the likelihood of being involved in a collision or being charged for motoring offences.

Busy city centre dual carriageway junction

Fuel Duty frozen

We're glad that the Chancellor has kept the freeze on fuel duty.

Since mid-February last year, the price of petrol has gone up by more than 18p/litre. As well as driving the bulk of UK business, the cost of motor fuel remains a significant part of a driver’s weekly spend.

  • A year ago, a family with two petrol cars was spending £203.90 a month petrol.
  • Now it is more than £240.

The freeze in fuel duty will help keep the pump price in check as the negotiations to leave the EU continue.

Car tax

VED rates for cars registered before April 2017 are set to be increased by RPI, but failure to review imminent changes in car tax means that, from 1 April onwards, there will be no VED incentive to buy a brand new lower CO2-emitting car.

Anyone who buys a new car that produces less than 100 g/km will pay the standard £140 to tax the vehicle, instead of £0 now, while a 131-140 g/km car will also pay £140 as opposed to the current £130. Taxing a gas guzzler, worth less than £40,000, will also cost £140 - £375 less than now.

We can forget about influencing car-buying behaviour, car tax is what it says on the form – tax, and more tax for potentially 40% of future new cars (40% of currently owned cars that emit at least 1g/km of CO2 cost £130 or less to tax).

Road building and urban congestion

Edmund King OBE, AA president: said: “The AA is pleased to see the Government is continuing with its investment in road building and easing congestion. We know from Department for Transport statistics that, if there is traffic on the road you need, on average, an extra 41 minutes to make a one-hour journey.

"The £90m for roads in the North and £23m for roads in the Midlands are welcome but ‘small beer’. The £690m urban congestion competition should also help, but the Government needs to work faster in tackling congestion without compromising safety.”

  • In October 2016 more than a third (35%) said their local roads were in poor condition.
  • In October 2015 only a quarter (25%) said their local roads were in poor condition.

As well as more funding, local authorities need to do their bit in assessing if a road is beyond patching and should be resurfaced to avoid repairing the same potholes time and again.

As well as more funding, local authorities need to do their bit in assessing if a road is beyond patching and should be resurfaced to avoid repairing the same potholes time and again
Edmund King OBE, AA president

 

Technology

The confirmation of further technological investment into driverless cars research is a step in the right direction.

Diesel cars

Drivers will have to wait until the Chancellor's Autumn Budget to hear the government's future taxation plans for diesels but can expect changes as the budget report confirms that "the government will continue to explore the appropriate tax treatment for diesel vehicles, and will engage with stakeholders ahead of making any tax changes at Autumn Budget 2017."

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