Budget 2017: Motorists hope Chancellor doesn’t hike insurance costs as prices ‘double’
The gap is only getting wider and the main culprit is insurance premium tax (IPT), which successive chancellors have adopted as a stealth tax.
Chancellor Philip Hammond presents his Budget today and drivers will be hoping he does not hit them with another hike to IPT, which has doubled from 6 to 12 per cent in 18 months.
Many are finding running a car increasingly hard with insurance premiums rising 177 per cent since 2000, dwarfing wage growth of 65 per cent over the same period, according to pay-as-you-go car insurer Cuvva.
Research shows that the average five cheapest comprehensive motor insurance premiums now cost £690 a year, up from £249 in 2000.
Cuvva founder Freddy Macnamara said if IPT rises again, the cost will be passed straight on to drivers: “Rising costs are making driving completely unaffordable for many people and this is likely to be contributing to plummeting car sales.”
New car registrations fell 12.2 per cent in October and the Society of Motor Manufacturers and Traders predicts another 5.4 per cent drop next year.
Macnamara said costly motor insurance is partly to blame for an increase in the number of incidents involving uninsured drivers: “A further IPT rise is likely to exacerbate this, while putting a financial strain on many people.”