Mixed Budget bag for drivers

22 April 2009

The Budget has offered a mixed bag for drivers, with a disappointing 2p increase in fuel duty as well a new £2,000 incentive for people to swap their old cars for newer models.

Throughout Alistair Darling’s speech, the chancellor focused on the need to pump money into flagging industries to try and stimulate growth and minimise job losses. He brought specific attention to the automotive industry, calling it “one of the British success stories of the last decade”, and confirmed the introduction of a car scrappage scheme next month.

Motorists will be able to trade in their old cars and get a £2,000 discount on new vehicles, when they trade cars that are over 10 years old. The scheme will last until March 2010 with more details to follow shortly from the secretary of state for business. 

Stephen Joseph, executive director of Campaign for Better Transport, has slammed the project: “This scheme has no environmental criteria, so it won’t result in greener cars. And it won’t even help save British jobs – it’ll subsidise cars made abroad. The government says it wants to cut carbon emissions, but in practice it is subsidising gas guzzlers.”

Credit information provider Equifax also points out that as the scrappage scheme will only benefit those who are exchanging cars they have had for 10 years or more, only a small proportion of people will be able to take advantage.

In addition, it argues that people who have kept the same car for 10 years are perhaps less likely to go out and buy a new car in the current climate – especially as a large proportion are likely to be on low incomes.

Edmund Kind, president of the AA, is more positive about the scheme: "A £2,000 incentive from Government and manufacturers will help the economy, environment and employment. Cleaner, greener and safer cars will replace some of the older gross polluters. The pot of £300 million could benefit 300,000 drivers.”

Fuel duty

But the decision to hike fuel duty by 2p per litre in September has provoked anger from motoring groups. Darling said he will continue to monitor fuel prices but he expects it to go up by 2p  in September and then a further 1p per litre above indexation each April for the next four years.

Petrolprices.com says that, from September, total duty on a litre of fuel will be 56.19p per litre. In a statement, the petrol comparison website said: “The chancellor appears to have ignored the pleas of motorists, not to mention the countless letters sent to MPs asking for fuel tax to be frozen.”

Tax on alcohol and cigarettes, meanwhile, will increase by 2% from 22 April.

The British Beers and Pub Association said raising the duty on alcohol would “sign the death warrant” for thousands of pubs - and for tens of thousands of British jobs.

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