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Motorists reduce recreational expenditure to pay for fuel28 June 2011by Hugh Bryant In a major survey of 150,000 people conducted by the AA, the motoring organisation has found that 76% of drivers (a rise from 63% in December) are having to make changes as a result of the high cost of fuel. Compared to 2007, 31% say that they now use their car less, 16% have cut down expenditure in other areas to pay for fuel and 29% say that they have done both. Hardest hit, in terms of cutbacks in other areas, have been non-essential recreational activities such as going out for a meal or taking a trip to the cinema. The Government was largely blamed by respondents for not doing more to help motorists although oil companies and oil-producing countries were also regarded as often not doing enough to reduce pump prices. Over 80% agreed that a fair fuel price regulating body was needed, consistent with the Federation Internationale de l'Automobile (FIA) position that the current arrangements for setting EU fuel prices based on the Rotterdam spot market are not representative of the EU market as a whole. (The AA is a member of the FIA that represents motorists throughout the EU). The Government is well aware of the huge increase in the cost of running a car but, of course, inherited a an unsustainable deficit that hugely limits what they can do to reduce the current tax burden for motorists if they are to return the country to greater economic stability. Their increased tax on oil company revenues will certainly help to avoid future duty increases but their promise of a fuel duty stabiliser, delayed, perhaps indefinitely, in view of its complexity, nonetheless remains eagerly anticipated by hard-pressed motorists. Of course, the hugely increasing price of car insurance has contributed to these increasing costs of running a car, especially for the younger driver. 17-21 year olds can expect to pay around £4,000 or more, while, for the first time driver, it's nearer £6,000 for annual car insurance. Jack Straw has been the latest to add his name to a growing list of prominent individuals and organisations, including major insurance companies, that believe more could be done to contain the rising cost of car insurance, especially in relation to fraud and costly referral patterns within the claims system. The Government is not blind to this either and the Transport Select Committee recently held a hearing into the rising cost of motor insurance. Central to their findings from this enquiry, which we've reported in full here: Transport Committee Report on the Cost of Motor Insurance, was the need to do more to combat fraud which many regard as endemic with Britain now dubbed the whiplash capital of Europe. The report also called for greater transparency as regards referral fees handled by car insurance companies although failed to recommend the banning of referral fees, despite the evidence from their expert witnesses and the recommendations of the Jackson Report in support of it. There is no doubt that motorists are becoming angry and feel let down by politicians. The labour party, that was widely preceived as anti-motorist when in power, is already trying to re-align its party's position towards greater motorist-friendliness, although public policy statements thus far have lacked detail. Despite limited, if any, current Government financial latitude to reduce the tax burden on motorists, they are acutely aware of the high cost of motoring that is now eroding the quality of life for the majority (as demonstrated by the AA's survey findings reported above) and it would be surprising if, in the budget before the next general election, the government did not cut fuel duty as part of a raft of measures intended to secure another term in office. In the meantime, it would certainly help if they would reverse their position on referral fees and agree to ban them in litigation including in car insurance claims. |
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