THE BLOG

Motorists Have Suffered Enough - The Government Must Think Again On The Insurance Premiums Tax

11/01/2017 20:07
David Jones/PA Wire

Motorists are used to the pain of rising fuel prices which soared again this month to the highest levels since July 2015.

Increases on the forecourt might grab all the media headlines.But it's not just the rises in fuel costs that risk driving motorists off the road. Big jumps in insurance premiums are hitting drivers even harder and are also forcing up the cost of motoring.

Car insurance premiums rose 19% last year, according to price comparison site MoneySuperMarket. The average motorist is now paying almost £100 a year more after premiums shot up from £500 to an average of £597 per year.

While the latest fuel increases are down to production cuts by Opec, the international organisation that exerts its grip on prices, the alarming rises in insurance costs are down to the Government.

Chancellor Philip Hammond increased Insurance Premium Tax (IPT) in his 2015 Budget from 6% to 9.5%. The Government increased the tax again to 10% in October 2016.

To the undoubted consternation of millions of motorists the Chancellor announced plans in his Autumn Statement in December to put the tax up a third time. The standard rate is due go up to 12% in June.

The Government's squeeze on motorists clearly ignores the fact that the car is still vital to most families across the country.

A total of 26.5million people of working age in England and Wales have access to a car. Of these, 16.7million people either drive themselves to work or catch a lift.

Indeed, research by the RAC Foundation shows that in rural areas, like my constituency of St Helens North, nearly three quarters of workers travel to work by car.

Furthermore, the growth in self-employment and of small businesses across the country is one of the major factors that has caused van traffic on all roads to grow strongly over the last decade. As the labour market changes, we need to recognise the changing needs of workers.

As the RAC Foundation makes clear: "the dominance of the car as a mode of transport in the early years of the 21st Century is absolute and that policy makers must recognise this fact as they introduce measures to cut traffic and hence ease congestion and fight climate change. The car continues to dominate most people's daily travel."

Worryingly, the general direction of Government policy seems to suggest ministers think that car use is going out of fashion. Yet the Government's own figures show that while on average at the individual level car use has fallen over the last decade or so, total road use continues to rise. Traffic on the most strategically important roads, like the M1 and M6, has had the largest growth.

Put another way, whereas commuting on the railways increased by 56% over the last decade, rail still represents a small share. In 2014, only 7% of all commuting trips were made by surface rail.

Indeed, I got a strong sense of where the Government's priorities lie when I asked about infrastructure investment in the Commons last month. The answer I received from Transport Minister Andrew Jones focussed almost entirely on rail infrastructure.

For me it is a false choice between road and rail - we need both.

And while measures to tackle climate change - like promoting rail travel - must always be central to Government transport policy we must remember that emissions linked to road use have fallen in every year since 2007.

The Government must think again about its proposed rise in the Insurance Premiums Tax.

Motorists have suffered enough and cannot be seen as a cash cow to fill the Government's spending black holes.

The car is still vital to millions of households, particularly outside city centres, and the Government at Westminster needs to recognise that and act accordingly.

Conor McGinn is the Labour MP for St Helens North

Comments

CONVERSATIONS