Rishi Sunak can’t save the British motorist

With or without Ulez, driving is becoming unaffordable for millions of people.

Photo by H. Armstrong Roberts/ClassicStock/Getty Images

Children who play and learn near busy roads, as around three million in England do, lose 5 per cent of their lung capacity to cars. In later life this means a higher risk of long-term health problems also caused by air pollution, including lung cancer, heart disease, dementia and stroke.

However, the Prime Minister is clear that while we should probably protect children’s right to develop normal-sized lungs, we shouldn’t be too hasty: what if we impinge on the freedom of some adults to drive their old car?

It was just such freedoms that Rishi Sunak sought to defend when he announced, from the front seat of “Margaret Thatcher’s old Rover”, his plan to protect the British motorist against policies such as ultra-low emission zones, 20mph limits and low-traffic neighbourhoods, and of course the great menace of Just Stop Oil, who sometimes walk slowly on roads.

While it’s true that an anti-Ultra Low Emissions Zone candidate (technically a Conservative, though he hesitated to identify as such on his leaflets) won the recent Uxbridge and South Ruislip by-election, the British motorist faces a much bigger set of challenges that Sunak is doing little or nothing to address.

The most important of these is the cost of debt. In 2009 the Bank of England made it historically cheap to borrow money, and the prices of things bought with debt – houses and cars – rose as people could afford to borrow more. Car prices were also supercharged by a widespread shift to new types of finance. The personal contract plan (PCP) was rapidly adopted because it made buying a very expensive car seem very cheap. It wasn’t, but in a PCP deal the customer doesn’t really buy the car – they rent it for three years and are then given the option to buy it, at which point they take out a PCP deal on another car. From 2011 to 2016, in a market juiced up on PCP, annual car registrations jumped by 39 per cent and the total amount of new car finance doubled.

The UK’s most popular car, the Ford Fiesta, has almost doubled in price in the last ten years (rising by 83 per cent), and in 2022 the UK’s total car debt rose above £40bn. Wages, however, did not keep up, and real (inflation-adjusted) wages barely moved.

A sharp rise in the cost of borrowing is affecting the housing market, as millions of households reckon with more expensive mortgages. Meanwhile, the average interest rate (annual percentage rate, or APR) on a new car is 8.4 per cent, or 11.5 per cent on a second-hand car, according to Auto Trader. Around a third of car-finance deals mature each year.

The latest Office for National Statistics survey on household finances reports that even as prices at the fuel pumps fall, people rightly feel that fuel prices are still high compared with their spending power, and are responding by driving less. The same survey finds that 30 per cent of the population cannot afford an “unexpected but necessary expense” of £850. Anyone who relies on their car will be familiar with unexpected but necessary expenses. The insurance company Warrantywise says that for cars over three years old, there’s an 84 per cent chance of breakdown over the next three years, with a typical bill of around £700.

This is reflected in the amount of loans and other finance deals (used for more than 80 per cent of car purchases) being taken out. In April of this year, consumer car finance fell by 15 per cent year on year, according to the Finance and Leasing Association. At the same time, the number of people seeking help with car debt has risen by almost 15 per cent in three years, according to the debt advice charity StepChange.

Perhaps the most exposed drivers are those who haven’t started yet: much has been made in recent years of the decline of driving among millennials and Gen Z. The number of 16-25-year-old drivers fell by 10 per cent in the first year of the pandemic. Between 2002 and 2021 the population grew by almost eight million people, but the total number of young (17-20 years old) drivers fell by 30 per cent, according to the National Travel Survey.

Many young people reject driving on environmental grounds (or because it’s mind- and buttock-numbingly dull) but in surveys the most common reason is the cost. Even those that can afford lessons currently have to wait six months to a year for a test, and the same again when they fail (most people do). The average new driver now faces an insurance premium of £1,750 a year. Young people are also more likely to prefer working from home – another cultural shift that diminishes car use.

[See also: Will Rishi Sunak sack Jeremy Hunt?]

The government is also going to have to make driving more expensive: it currently hands two tax breaks to anyone wealthy enough to buy an electric car, by not charging Vehicle Excise Duty (VED) and by not replacing the revenue lost from fuel duty. The UK has been bleeding money for over a decade through successive governments’ freeze on fuel duty, which made up 7 per cent of government income in 2000 and now accounts for just over 3 per cent. If we lose all the money from fuel duty we will have to find it somewhere else. Indeed, electric vehicles will have to start paying VED from 2025, and there will be an extra “Tesla tax” on electric vehicles worth more than £40,000.

Electric cars will become even more expensive if more large battery plants are not located in the UK, and we begin importing all our cars from abroad; the attempt to defray this huge consumer expense (and the loss of jobs in the car industry) has already cost us £500m in subsidies this year.

The consumer also pays for successive Conservative governments’ defunding of local councils, meaning the number of pothole repairs have halved in less than a decade. As elsewhere, the expense is not actually eliminated, but moved to the driver, in the form of damage to their vehicles, more frequent maintenance and, in some cases, accidents.

This brings us to the way the government really does keep cars on the road: by making all other forms of transport effectively unusable. On-the-day rail prices in the UK are the highest in Europe. Thousands of bus services have been cut since the launch of the government’s national bus strategy, again largely due to the defunding of local government. A nation that rightly opposes the health effects of car use (the Chancellor is one of many MPs who has campaigned to reduce traffic in his constituency), not to mention the tedium of driving, is nonetheless forced to do so by the lack of alternatives.

Politically, then, it’s a gamble: some people like driving, a lot of people need to – but there’s no ignoring the reality that preserving the ability of people to do so at current levels will be hugely expensive.