Reaction to the Chancellor's Budget - RAC
17 March 2016 | Author: Steve Gooding, Director, RAC Foundation

Motorists might be forgiven for heaving a sigh of relief yesterday after the Chancellor resisted the siren calls to hike fuel duty and limited the increase in insurance tax to a modest 0.5 %, and those who regularly cross the Bristol Channel will welcome the Government commitment to halve the tolls on the Severn Crossing when it reverts to public ownership in a couple of years. On balance, then, not a bad outcome.

But even as the spectre of a fuel duty hike was fading the same motorists might remember that as a consequence of this largesse the Chancellor is still set to do very well out of motoring taxes. Fuel duty income was more than £27 billion in the 2015 calendar year and expected to be similar in 2016. And even in the unlikely event fuel retailers ever wanted to give their products away for free the chancellor would still get 70p per litre - 58p in duty and the rest from the VAT levied on top.

With VAT and fuel duty already accounting for three-quarters of the price we pay at the pumps any further increase would have been tantamount to the Chancellor deciding to drive people off the road, a particular threat for low-income households.

Motorists might also like to see the calculations behind the plan to charge £3.30 for cars travelling from England into Wales over the Severn Crossing. If a toll is needed to cover the cost of operating and maintaining this vital link then maybe that's a good deal, but might the numbers show that the Government could go further?

There were signs in the Budget that Mr Osborne had once again been poring over his road atlas as several infrastructure schemes were announced or accelerated in the north, roads as well as rail.

This is a tacit acknowledgement that the twin hurdles of traffic and geography – specifically, congestion and the Pennines – could both stand in the way of the Northern Powerhouse succeeding. Investment in significantly-improved transport links will be key to growing the northern economy and unlocking the potential of the regional workforce.

The big problem that remains unsolved is road maintenance. As councils limp on with shrinking budgets and growing repair lists there must be an argument for having an innovation strategy not just for Highways England but for all roads. High-end technology to create driverless cars needs to go hand-in-hand with clever engineering to exploit raw materials and create 'smart' road surfaces that will make potholes a thing of the past.

Talking of budgetary pressure one possible sting in the tail was the Chancellor's passing promise to take another £3.5 billion out of unprotected Whitehall spending in 2019-20, which includes the Transport. It is one thing to have an ever-growing and ambitious programme of capital projects but you do still need the departmental resource to make them happen.

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