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Budget: AA calls for Chancellor Jeremy Hunt to freeze fuel duty and cut taxes for car insurance policies on March 6





Drivers need the Government to address the rising price of car insurance and extend the freeze on fuel duty, claims the AA, which is outlining what it wants to see from next week’s Budget.

With little over a week to go until Chancellor Jeremy Hunt’s statement on Wednesday March 6 – and the last before a General Election – the breakdown organisation is setting out its case for the measures it says cash-strapped motorists desperately need.

It is calling for a continued freeze in fuel duty to keep pump prices ‘affordable’ alongside a reduction in VAT for on-street EV charging from 20% to 5%.

The AA has released the policies it says drivers need. Image: iStock.
The AA has released the policies it says drivers need. Image: iStock.

But amid sky-high insurance costs for vehicle owners, one major policy being put forward by the organisation is a proposed cut to Insurance Premium Tax to help bring down the price of cover.

According to figures released towards the end of last year, drivers are being charged, on average, £251 more now for an annual car insurance policy.

The AA argues that the Government should cut the tax applied to insurance premiums by 25% for all drivers – with at least a 50% cut for young motorists, who face record prices when needing to take out cover.

Learner drivers need more help with the cost of insurance, says the AA. Image: iStock.
Learner drivers need more help with the cost of insurance, says the AA. Image: iStock.

Figures released by Compare the Market last year found that premiums for drivers under 24 had leapt by at least £1,200 in 12 months alone.

Jakob Pfaudler, the AA’s chief executive officer, said: “The Chancellor has the chance to give confidence to drivers now, and for the future, in the final budget before the General Election.

“To help households tackle the cost-of-living crisis, maintaining the freeze in fuel duty and equalising VAT for on-street EV charging to match domestic energy rates would be a great first step.

“Similarly, help to make the cost of compulsory insurance more affordable, especially for younger drivers, would be well received.”

The AA is proposing a Skills Funding Agency to support mechanics as technology changes. Image: iStock.
The AA is proposing a Skills Funding Agency to support mechanics as technology changes. Image: iStock.

A reintroduction of incentives for drivers considering buying an electric vehicle is also on the AA’s wish list, which wants to see rates of Vehicle Excise Duty remain lower than for petrol and diesel vehicles to further act as encouragement.

With the number of electric vehicles on the road rising, it is also proposing a new Skills Funding Agency to help increase the number of skilled workers within the automotive repair sector.

Jakob Pfaudler added: “Futureproofing the automotive workforce is needed too, and the creation of a new Skills Funding Agency would help drivers in the years to come. Investing in school and college students in this exciting sector will help keep people on the road and instep with vehicle technology.”



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