Government announces new 'cost of driving' measures

The Government has announced measures to help motorists to cut the cost of running a car. These include a crackdown on whiplash fraud, a freeze on MOT test prices and a scheme designed to reduce the cost of fuel at motorway service stations, Justice Secretary Chris Grayling announced today.

Quoting statistics from the AA, the Ministry of Justice said that the average cost of motor insurance premiums has already fallen by more than 12% over the past year, equivalent to an £80 reduction on an average policy, thanks to reforms to no-win, no-fee deals and action on rogue claims firms.

Justice Secretary Chris Grayling said: "We are turning the tide on the compensation culture and helping hard working people by tackling high insurance premiums and other motoring costs.

"We have already helped families by cutting income tax for 25 million people by raising their personal allowance, by freezing council tax and by helping with tax-free childcare for example. But we want to do more.

"It’s not right that people who cheat the insurance system get away with it while forcing up the price for everyone else - so we are now going after whiplash fraudsters and will keep on driving premiums down."

Mr Grayling has announced that:

• 'Whiplash cheats', whose bogus compensation claims have helped to force up average motor insurance premiums, will be targeted by new independent medical panels which will ensure only evidence from accredited professionals can be considered. This will mean people can no longer profit from exaggerated or fraudulent compensation claims but victims with genuine cases can still get the help they deserve. These will be introduced from next year.
• The statutory maximum price of the MOT test for a car will be frozen at £54.85 until 2015 – potentially saving up to £50m for drivers every year.
• Action will be taken on high motorway fuel prices. New comparison road signs will be trialled which will show prices at different service stations along a route, making it easier for drivers to get the cheapest deal and encouraging competition on prices.
• The fees charged for the driving test will be reviewed, including the current £31 for the theory test, £62 for the practical test and £50 fee for the provisional licence, to identify any opportunity to save money for the 1.5m car drivers who take their test every year.

Roads Minister Robert Goodwill said: "The costs of owning and running a car are felt by millions of households and businesses across the nation. The Government is determined to help keep those costs down. That is why we are freezing the price for an MOT test and looking again at the costs associated with getting a driving licence.

"We also want to make it easier for people to get a better deal on fuel at motorway service stations, for instance through a trial of motorway signs that will show motorists the different fuel prices on offer on their route."

Te Government has highlighted that new statistics from the AA show that motor insurance premiums are now falling at the fastest rate since 1994 – a fall of 12.3% in the year to October for an average comprehensive insurance policy, from £648 in October 2012 to £568 in October 2013.

New figures from the Ministry of Justice’s Claims Management Regulation unit also show that the number of claims firms in the market has plummeted by more than 1,000 following the law changes, from a peak of 2,553 in December 2011 to 1,485 last month. The firms are responsible for bombarding the public with adverts for profitable compensation claims.

Despite these successes whiplash claims remain an issue which the Government says it will continue to fight. The number of claims has fallen since 2011 but there were still almost half a million whiplash claims in 2012. Insurers say these claims cost them more than £2bn in payouts and lead to an average premium increase of £90 for drivers. Each whiplash compensation payout costs an average of £2,400 insurers say, with an additional £2,000 in legal costs.

The Government says it will now work quickly with experts to implement the independent medical panels. This will include developing a scheme for accrediting medical experts who can assess whiplash injuries, enhancing the medical reporting process, improving information for medical assessments and carrying out spot checks to ensure quality.

Plans for improved data sharing by insurers will also help police, including the specialist Insurance Fraud Enforcement Department, to track down criminal fraudsters, the Government says.

Mary Creagh MP, Labour’s Shadow Transport Secretary, said:

“David Cameron’s cost of living crisis is squeezing motorists at home and on the road. These announcements will be cold comfort for families struggling with rising food and energy bills.

“Working people are over £1,500 a year worse off- prices have gone up faster than wages in 39 of the 40 months while he has been Prime Minister.

"If David Cameron was serious about tackling his cost of living crisis he would back Labour’s plans to freeze energy bills, make work pay by expanding free childcare for working parents and help millions of people on middle and low incomes by introducing a lower 10p starting rate of tax.”