Cost of motoring hits low earners 11 Dec 2008

Petrol prices have a significant impact on the transport choices of low earners and are becoming much more important for social policy according to Professor Stephen Glaister, Director of the Royal Automobile Club Foundation speaking at a conference* on transport and social exclusion in Birmingham today (11).

Professor Glaister will explain that the poorest households have experienced the most rapid growth in car ownership over recent years, due to the falling costs of car purchase as well as the increased development of inaccessible health, education and employment centres.

Whilst the price of road fuel remains an important issue for the majority of UK households, Glaister will state that the rural poor are significantly affected as they travel as much as the urban rich. This causes problems for social policy because rural residents tend to have fewer public transport alternatives.

Professor Glaister will highlight that car travel is often considered to be the preserve of the wealthy, when in fact 60% of rail travel is completed by the highest two income groups. He will also reveal that low earners spend a similar proportion of their weekly income as high earners on operating cars.

Glaister will describe how taxes on car use have grown in relation to taxes on ownership and that this relationship maybe reversed in the future if further fuel duty increases become politically difficult. If there is a policy of increasing the Vehicle Excise Duty (VED) on larger cars, this could be socially regressive, as those on lower incomes are less able to purchase the newer vehicles with lower emissions.

Stephen Glaister, Director of the Royal Automobile Club Foundation says;

‘Fuel should not be priced as a luxury as car travel is essential for accessibility regardless of income. All income groups rely on roads for over 92% of their travel. People travel more as they get wealthier, but cars are now the most important form of transport for each and every income group. Fuel prices are becoming much more important in social policy. It is important that overall motoring policy and tax rates are set with this in mind.’

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Motoring costs fact file:

  • Motoring now takes up a greater proportion of weekly household expenditure than it did fifty years ago
  • Household spending on transport accounts for 14% of all expenditure.
  • Vehicle fuelling is now the third most expensive weekly purchase.
  • The average household spends £62 a week on transport - £28.60 on personal transport and £18.20 on fuel. Only £10 is spent on rail, tube and bus fares.
  • Working-age couples, the traditional family unit and retired couples tend to spend the most on transport.