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RAC Foundation: 830,000 households in UK spend at least 27% of their income on running a car; “transport poverty”
7 March 2013
The poorest 10% of car-owning households in the UK—some 830,000—are spending at least 27% of their disposable income on buying and running a vehicle and are thus “mired in transport poverty”, according to a new analysis by the RAC Foundation. The Royal Automobile Club (RAC) Foundation for Motoring is a transport policy and research organisation which explores the economic, mobility, safety and environmental issues relating to roads and their users.
By contrast, those in the wealthiest car-owning households are spending around 12% of their disposable incomes on purchasing and operating a car.
Of a total weekly expenditure of £167 (US$250), those in the poorest car-owning households see £44 (US$66) go on vehicle-related purchasing and operating costs. Of the £44, £16 (US$24) is used to buy gasoline and diesel and £8.30 (US$12) is spent on insurance.
The high level of expenditure is revealed in analysis of previously unreleased data from the Office for National Statistics which has been seen by the RAC Foundation.
These figures should shock the Chancellor. We already knew transport was the single biggest area of household expenditure bar none. But this spending breakdown just for car-owning households is not normally available. It lays bare the truth about the extent of transport poverty in the UK.
There is understandable concern about home owners having to spend more than 10% of their money on heating their houses. But to most of us transport is another essential item and our outgoings on getting about eclipse all other domestic bills.
George Osborne will soon deliver his budget and is likely to tinker with the rate of fuel duty. For people already drowning under the weight of motoring costs, cutting a penny or two off the price of a litre of fuel will help but is like rearranging the deck chairs on the Titanic—ultimately futile. To make any meaningful difference to those on the lowest incomes the rate will need to be cut much further.—Professor Stephen Glaister, director of the RAC Foundation
In November 2012 the Office for National Statistics published the Living Costs and Food Survey for 2011. The published results showed that of average household (car and non-car owning alike) expenditure of £483.60 (US$725) per week, transport was the highest at £65.70 (US$99) or 14%.
It was only upon request that the RAC Foundation obtained from the ONS data relating only to car owning households.
The average price of unleaded gasoline in the UK in January 2013 was 132.7 p/liter (US$7.54/gallon US), up from 76.3 p/liter (US$4.32/gallon US) in January 2003. Diesel prices are a few p higher per liter.
In January, the UK Office of Fair Trading said that increases in gasoline and diesel prices over the past ten years are largely caused by increases in taxation and oil prices and not a lack of competition. (Pre-tax, the UK has some of the cheapest road fuel prices in Europe, according to the OFT.) About 60% of the pump price is accounted for by fuel duty and VAT, according to Professor Stephen Glaister, director of the RAC Foundation.
The UK Automobile Association (AA) reported in February that January’s UK gasoline sales fell to the lowest tracked by government in 23 years. AA also reported that gasoline prices in the UK shot up 5p a liter over January, with speculation in fuel and currency markets being the main drivers of this third price surge in less than a year.
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