Two tier trouble?

The announcement that Government officials are considering introducing a two tier Vehicle Excise Duty (VED) charge will give food for thought to motorhome insurance providers across the UK.

Ministers are currently looking at VED revenue knowing that Government incentives to encourage the “Green” revolution in motor technology is going to adversely affect the money coming in over the next decade. Currently VED brings in £6 billion a year but the system which penalises high emission motor vehicles and rewards low emission vehicles is bound to see its revenue drop as zero emission vehicles become more commonplace. In fact the Office of Budget Responsibility believes VED will bring in £100 million less in 2014/2015 and plummet year on year after that.

It is this fall in revenue that the Government are trying to address and the committee concerned now believes a system whereby drivers who keep to local roads are charged less than those who use the main road arteries in the UK could work. It is not the only plan under investigation but certainly the one that has drawn most press attention. It will certainly affect motorhome owners in a big way and begs the question would motorhome insurance companies assess insurance premiums in a similar way.

The Government has confirmed that any decision will only be made after closer consultation with all sectors of the motor industry, and if that is the case then it will find most motoring organisations that represent drivers steadfastly opposed to the introduction of what they see as a two tier system that will benefit no-one. Many observers believe the cost of implementing such a system would negate much of the increased revenue while others see a nightmare scenario of local roads around major cities being clogged up with motorists keen to avoid charges for using main roads.

Whatever decision is taken it is for sure motor insurance companies will find themselves having to adapt once more to Government policy.

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