Press Story

The Chancellor should avoid further delays in fuel duty increases and, instead, improve rail and bus services, according to a new report published by the think tank IPPR today.

The report says that rail and bus users are being hit twice by the high cost of fares and cuts in services while many poorer families have no access to alternative transport. By contrast, it argues that motorists can cut costs by switching to smaller and more fuel-efficient cars and by cutting out non-essential journeys.

The report argues there is no 'war on motorists' and shows that between 1997 to 2010, rail fares rose by 66.2 per cent while all motoring costs rose by just 32.5 per cent, equivalent to a 6.6 per cent fall in real terms. Bus and coach fares rose most of all, by 76.1 per cent.

Last week the Government announced that many rail fares will rise by 6.2 per cent and by 11 per cent in some cases. Meanwhile, the Chancellor has already announced delays in fuel duty increases costing taxpayers £2.8 billion or £14 billion over five years.

Will Straw, IPPR Associate Director, said:

"No number of Tax Payers Alliance petitions will change the facts. Compared to users of public transport, there is no war on motorists.

"Rail and bus users have seen fares spiral out of control while the cost of driving has actually fallen over the last decade. Users of public transport rarely have an alternative, while car drivers can switch to smaller and more fuel-efficient cars and cut out non-essential journeys.

"Given the pressures on the public purse, the Chancellor should avoid further delays in fuel duty and think again on rail fare hikes."

The report recommends:

Government should make every effort to avoid further delays in fuel duty increases.
Government and local agencies should look for new ways to extend road pricing and congestion charging, particularly where these can provide a future revenue stream to finance improvements in public transport infrastructure and services.
Measures to improve bus and coach services, which are the most accessible form of public transport, particularly in areas with poor rail connections, should also be prioritised. Given that bus fares have increased more than for any other mode of transport, priority should be given to bringing down these costs.
Improvements in public transport, walking and cycling facilities should also be supported through an increase in government support for transport capital projects. Given the current low interest rates, there is a real opportunity available now to make much-needed improvements in public transport and other infrastructure that can increase patronage and reduce the environmental impacts of existing fleets and stock. The nascent Green Investment Bank should be empowered to begin borrowing immediately to support these projects

Notes to Editors

IPPR's new report - The War on Motorists: myth or reality? - is published at http://bit.ly/IPPR9542

The decision to delay increases in fuel duties, recently extended to January 2013, has cost the exchequer nearly £2.8 billion in 2011/12 alone, and will amount to nearly £14 billion over the next five years. In June, the Chancellor announced a delay in the fuel duty rate rise until 1st January 2013, at a cost of around £550 million. In last year's Autumn Statement, the Chancellor announced the 3.02p per litre increase due to take effect in January would be deferred until August 2012, and the inflation increase planned for 1st August would be cancelled, costing a further £375 million. In last year's Budget, the Chancellor proposed three changes to duty rates: an immediate cut in the rate by 1p, abolition of the escalator (replacing with a fair fuel stabiliser), and a delay in the two inflation-driven increases set for April 2011 and April 2012. These changes will cost around £1.9 billion in 2011/12.

Fuel costs drive perceptions about motoring costs, but there remains a gap between perception and reality. While fuel is the most obvious cost component of running a car, it is just part of the overall cost of motoring. In 2010, fuel accounted for one-third (£21) of an average household's weekly motoring costs of £77, or less than 5 per cent of average household spending (though obviously this proportion is higher for poorer car-owning households). Although fuel duty rates on petrol and diesel are high, they were actually 7 per cent lower in real terms in 2011 than in 2001. In the same time period, the real cost of motoring (including purchase) also fell, largely due to a decline in purchase costs. While the UK has generally higher rates of fuel duty than other EU countries, this is offset by lower motoring taxes and charges elsewhere - for instance, the UK has no car registration tax and very few motorway tolls. Compared to other EU countries, the British motorist is not highly taxed.

While spending on roads is not commensurate with motoring tax revenue, there is no good policy justification for making these two figures balance: road investment should be justified on grounds of wider transport objectives and needs. In 2010, government spent around £9 billion on roads, representing 40 per cent of total public spending on transport. In addition to this direct expenditure, the costs to society of car travel are considerable - these include congestion, road casualties, greenhouse gas emissions, air pollution, noise, and physical inactivity. Estimates of these social and environmental costs range up to £56 billion in total - even excluding congestion costs, they are well over £32 billion.

Contact

Richard Darlington, 07525 481 602, r.darlington@ippr.org

Tim Finch, 07595 920899, t.finch@ippr.org