Budget 2014

Duty freeze still leaves the squeeze on drivers

Duty freeze still leaves the squeeze on drivers

Duty freeze still leaves the squeeze on drivers

Keeping fuel duty level for a fourth year is very welcome relief for UK drivers but the freeze still leaves the squeeze on families and businesses that rely on four wheels to function and prosper.

Now that we know, from official figures, that inflation-hit earnings are effectively at 2002 levels and car use is struggling to revive, perhaps a short-term cut in fuel duty would have got the UK properly mobile again.

“AA research shows that 70% of lower-paid workers, pensioners and young workers who have to drive to their first jobs are still forced by relatively high pump prices to cut back on car use, other spending to compensate or both,” says Edmund King, the AA’s president.

For drivers the 2014 budget provided few surprises, except perhaps for the proud owners of older cars which are reaching their 40th birthday - from 1 April 2014 the vehicle excise duty exemption scheme will become a rolling one allowing more cars into the scheme when they reach 40 years.

Other motoring measures in the 2014 budget were previously announced ones for example, the increase in VED (car tax) rates by RPI and the continued freeze in fuel duty rates.

The road fuel ‘5p per litre duty rebate scheme’ for retailers in remote parts of Scotland is to be extended to 17 more remote UK locations subject to EC approval. This could mean localities in Cornwall, Devon, Cumbria, Powys, Anglesey and other areas of the UK benefiting from cheaper fuel.

As expected company car tax rates and differentials for CO2 bandings are to be increased from 2017.

Potholes

Despite a mild winter the record breaking wet weather has broken many roads so a £200m pot for pothole repairs will be welcomed by drivers who have been reporting record numbers.

This biddable fund for highway authorities is believed to come on top of £140m emergency funding for repairs announced a few weeks ago.

Roads

In Wales new finance arrangements for the Government mean the M4 relief road scheme near Newport is now more likely to go ahead.

In the north-west the £270m tolled Mersey Gateway toll bridge (Runcorn-Widnes) has now been given Government guarantees.

The A1 road study between Newcastle and Edinburgh is a critical link between Scotland and England and improvements are long overdue, the study should waste no time in producing firm proposals.

Key points for motorists

  • Fuel duty frozen until 2015
  • 5p a litre rural fuel duty rebate scheme extension for 17 remote UK locations (EC approval being sought)
  • VED increased by RPI from April 1st 2014
  • New rolling VED exemption for older vehicles (40 years)
  • Methanol fuel duty set at reduced rate of 9.23p per litre
  • £200m pothole pot for local highway authorities to bid for funding from
  • M4 in Wales - improvements likely with new tax and borrowing rules for Wales
  • Company car tax 2016/17 rates set including removal of diesel supplement new rates set (increased) for 2017 to 2019
  • £270m guarantee for Mersey Gateway toll bridge (Runcorn-Widnes)
  • A1 Newcastle to Edinburgh road study to be extended further north into Scotland and match funding for study suggested with Scottish Government.

(19 March 2014)