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25th November 2015

Autumn statement tackles whiplash

In today’s Autumn Statement, chancellor of the exchequer George Osborne stated that the government will put an end to the ‘compensation culture’ of minor whiplash claims.

The move he said, which is suggested will save £1bn in the cost of minor motor injury claims, will save consumers an average of £40-50 a year in insurance premiums.

Mr Osborne also stated that the ‘development and sale of Ultra Low Emission Vehicles will continue to be supported – but in light of the slower than expected introduction of more rigorous EU emissions testing, we will delay the removal of the diesel supplement from company cars until 2021.’ This sees the reassessment of three per cent company car benefit-in-kind (BIK) diesel surcharge postponed.

Mr Osbourne also confirmed large employers in the UK will have to pay an ‘apprenticeship levy’ amounting to 0.5% of their total wage bill to encourage large companies to offer quality training to young people. However, smaller companies who make less then £3m will not pay the levy.

There was lack of an announcement regarding fuel duty.

The statement has been met with a number of responses from industry:

Thatcham Research’s Apprentice Academy today welcomed the Chancellor’s announcements on apprenticeships, but called for greater clarity around the funding and payment framework.

‘Today’s announcement gives a shot in the arm to those involved in training and recruiting Britain’s young talent, especially in the motor repair industry where we have great skills shortages,’ says Dean Lander, head of operations for the Thatcham Apprentice Academy. ‘However, much greater clarity is needed around how the funding and payment framework will operate. In our experience, cash flow is one of the key issues for employers.’

‘We are also reassured that the Government plans to establish a new employer-led body to set apprenticeship standards moving forward and that, in his statement, George Osbourne expressed that this body will be focused on quality.’

Ageas UK CEO Andy Watson said, ‘Ageas welcomes the Government’s continued commitment to tackling compensation culture. Today’s announcement in the Autumn Statement is a very substantial and positive move that should reduce needless costs in whiplash claims. That can only help customers and we have long called for this type of reform. We look forward to working with the government on the detail of the proposals ensure that they have the positive impact on claims costs we all want to see.’

An SMMT statement reads, ‘Government engagement with industry has been fundamental to the recent success and global competitiveness of UK automotive, so today’s commitment by the Chancellor to a long-term industrial strategy for the sector is encouraging. More specifically, we were pleased to see the Chancellor heed SMMT’s call for increased investment in Catapult Centres and the extension of funding for the Advanced Propulsion Centre (APC) – both of which are vital to securing the UK’s position as a global centre of excellence for innovation. Meanwhile, the renewed support for ultra low emission vehicles (ULEVs) will help maintain the UK’s position as Europe’s fastest growing market for these new technologies.’

Rupert Pontin, head of vaulations at Glass’s said, ‘Thanks to economic growth forecasts higher than those predicted by most experts, this was a much better Autumn Statement than expected. While there is, of course, a reasonable chance that those figures will not be met, we remain cautiously optimistic. Generally, we are looking forward to a relatively stable economic picture over the next couple of years, which is good news for consumer confidence and therefore for the motor industry.

‘There were some specific points of interest. The delay of the 3% diesel surcharge could have quite substantial implications for the fleet industry although, from our point of view, is unlikely to have an impact on values. More welcome news was that automotive industry funding from the Government will continue at its current level for a further five years and there was also a commitment to continue financial support for ULEVs.

RAC insurance director, Mark Godfrey said, ‘Anything that reduces the cost of car insurance for motorists has to be welcomed, but we should be cautious around the saving figure of £40-£50 a year on average policy costs as previous estimates of savings have been over-egged and one of the reasons behind recent increases in car insurance premiums across the market. The devil, of course, will be in the detail which we wait to see.’

Quentin Willson of FairFuelUK said, ‘Our intense lobbying, campaigning and empirical economic evidence that cutting duty is good for the whole economy has resonated with the Chancellor. We are grateful to him for the continuing freeze that’s lasted five years.’

RAC chief engineer, David Bizley said, ‘Motorists may be relieved that the Chancellor has not used low fuel prices as an immediate opportunity to raise duty on petrol and diesel to help reduce the deficit. But by not mentioning fuel duty in his Autumn Statement, the implication is that the 57.95p charged on every litre currently will be subject to inflationary increases in line with RPI from April 2016 onwards.’

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