When you need a car to take the kids safely to school, drive to work and ferry the family around, it can be hard for working parents to economise on ever-increasing driving costs.
As George Osborne rose to give his third Budget speech, families who have seen the amount of money they spend on motoring soar in recent years, must have been hoping the Chancellor would give them something to cheer.
Fuel duty increase
Unfortunately he didn’t have much good news for the nation’s drivers. With every 1p cut in fuel duty costing the Government £500 million a year, the Chancellor is perhaps unlikely to give in to the calls for help with the price of the school run or the daily commute.
However, his decision to go ahead with the planned 3p duty increase from August will have been met with disappointment across the country.
Fuel price increases
In terms of fuel prices for us, the average litre of petrol now costs 139.67p, with diesel setting motorists back 146.39p a litre. The August rise, including VAT, will put another 3.62p a litre on prices at the pumps, meaning that a typical 50-litre petrol refill will cost £1.81 more.
Families who rely on their cars can only hope that inflation continues its downward trend, as predicted by the Governor of the Bank of England this week, as they will also be hit again when they have to tax their vehicles.
Road tax increases
Vehicle excise duty – better known as road tax – will rise in line with inflation, Mr Osborne announced. The latest CPI inflation figure for February was 3.4% – above official targets but down on previous months’ eye-wateringly high rates which have been close to and above 5%.
If all this leaves you feeling depressed, and unable to take non-essential journeys, you are not alone. Motoring groups and personal finance experts have reacted with dismay.
RAC technical director, David Bizley, said: “This was the chance to do the right thing for motorists who pay around £45 billion a year in motoring taxes – instead he’s given them more pain at the pumps.”
Ed Saunders, director at Smith Cooper accountants in the Midlands, added that the cost of fuel has been hit hard with the increases to VAT and duty in recent years. He pointed out that the Government’s tax take on fuel has gone up as the price has risen, so any attempts to claim credit for dropping the fuel duty escalator can be put down to political spin.
One option for families living in London, Bristol, Cambridge, Oxford and Maidstone is to join the growing ranks of car sharers who use services like Zipcar. The company estimates that a motorist who averages 5,000 miles annually could save up to £3,117, while people who cover 15,000 miles every year could see savings of £3,079.
Of course, these savings have to balanced with the convenience of having your own car parked outside the house whenever you need it. But given the ever-rising cost of fuel, car insurance, servicing and tax that families look set to be faced with for the foreseeable future and beyond, car sharing schemes may become an established feature of modern life.
Other impacts of the Budget 2012: