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Archive for June, 2012

What do they say in the finance world? ‘Past performance is no guarantee of future results.’

The same, unfortunately, tragically, could be said of road casualty figures. After a decline every year since 2003 in the number of people killed on Great Britain’s roads there has now been an increase.

In 2010, 1,850 people died. Last year that figure had grown to 1,901.

The number of people killed or seriously injured also rose – from 24,510 to 25,023.

Overall, including those people only slightly hurt, there was a slight drop in casualties: from 208,648 to 203,950.

The change cannot be accounted for by a rise in traffic as the volume in 2011 (303.3 billion miles) was only marginally up on the previous year (303.2 billion miles).

It is notable that car drivers and passengers make up less than half of those killed with pedestrians in particular also paying a heavy price in terms of lives lost. There was a particularly stark rise in those on foot being killed, up 12% to 453.

But why are more pedestrians dying in greater numbers? Is it due to more and more people being distracted by using mobile phones and listening to music? Most of these deaths will have been on urban roads managed by local authorities, the same local authorities for whom central government has removed casualty reduction targets and slashed road safety budgets. The concern is that there is a direct link between these factors.

While one should treat a single year’s data with caution these figures are sobering. Clearly casualty reduction is not a one way street.

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Good news for drivers with diesel cars heading to the continent. Not so good news for owners of petrol cars. Data is mainly from Europe’s Energy Portal, plus DECC, with some of our own exchange rate calculations based on Post Office tourist rates.

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Even as the government comes under pressure to abandon the planned August rise in fuel duty, the European Commission is looking at how it might raise it on diesel (at least relative to petrol).

According to reports in the European Voice, EU member states are expected to reject a Commission proposal to tax all fuels based on their energy and CO2 content. When it comes to road fuels this would mean that diesel – which has a higher energy content than petrol, and hence higher CO2 emissions per litre burnt than petrol – could no longer be taxed at the preferential rate currently seen in all member states except the UK where the same duty rate is applied to both petrol and diesel (and even in the UK, despite the existing parity, there would be a rise in the diesel rate of duty).

Many member states are rejecting this plan as it relates to road transport, while Germany, Poland and the UK appear to be opposing the entire idea. They fear the move would hurt their economies, particularly the diesel market and the commercial sector which relies heavily on high-mileage diesel vehicles. In the UK, for example, more than 50% of new cars sold are now fuelled by diesel.

As a recent Institute for Fiscal Studies report for the RAC Foundation – Fuel for Thought: The what, why and how of motoring taxation – showed, however, levying a higher tax on diesel would make sense from an economic theory perspective, as it would ‘internalise’ the greater costs to society of burning diesel as compared to the same amount of petrol.

So which should take precedence? Economic theory or the real-world needs of ‘the economy’? Compromise options include an EU-wide minimum tax rate (but no maximum) or to exempt commercial vehicles.

If nothing else this issue shows that fuel taxation is a major concern across the entire continent, not just on these islands.

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The DfT has restated just how much money will be saved by the abolition of the paper counterpart to the driving licence which was announced last year as one result of the red tape challenge.

According to the DfT the change will see the Department save £947,000 and licence holders save £8.34 million (it’s not clear whether this is a one-off figure or over a period of time). Not a fortune in the grand scheme of things, but as they say ‘every little helps’. Best not ask how much money could have been saved if the things had not been introduced in the first place.

Staying with driving licences, the Daily Mail reports that another change due in 2015 – which will see the cards contain a micro-chip storing data about drivers – could also allow the Union Jack to be displayed. The paper says that EU rules and regulations never actually ruled this out and that any member state could put their national emblem alongside the European stars; it was just that the previous government decided not to go for it.

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DVLA Scam

The Driving Standards Agency drivingstandardsagency@service.govdelivery.com is alerting drivers to a scam asking people to verify their licence details online.

People who receive an email like the one below should delete it. The DVLA http://www.dft.gov.uk/dvla/  has confirmed it has not sent out any such email.

“From: DVLA
Subject: Update Your License Details

We are currrently upgrading our database and all drivers are required to update and verify there driver’s license details.To complete your license verification with us, you are required to fill out the form in the link below.

{Fake link}

Drivers that refuses to upgrade his or her details within two weeks of receiving this verification email will lose his or her driver’s License and will have to take a fresh driving test.

We sincerely apologise for any inconviniences this might have caused you.

Thank you for your co-operation.

(c) Driver and Vehicle Licensing Agency Swansea SA6 7JL”

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Relief for drivers at the pumps then. Figures show the price of fuel has fallen about 4p a litre in the last month following a similar fall in the four weeks prior to that.

Clearly the recent decline in the price of oil – from around $120 a barrel to $97 today – has had a large part to play. But given that the cost of oil is only one constituent of pump prices any fall in the barrel price is never going to be matched by a similar percentage decrease at the filling station.

According to the UK-PIA – the body which represents the oil companies involved in refining in this country – we have one of the most competitive fuel markets in Europe. Don’t blame us they say, blame the high levels of tax which currently account for about 60% of the pump price in this country.

The best drivers can hope for is that changes to the pump prices accurately reflect underlying changes to the price of oil. There has long been a suspicion that pump prices are quick to rise after the price of oil goes up and slow to fall when it comes down.

This chart shows some of the correlation. What it does not show is how other factors have changed: the cost of production and refining, changes in taxation, exchange rates etc.

Interesting this week to also note from the DVLA’s new car licensing figures that there is little sign of the attraction of diesel cars waning. In Q1 of 2012 they made up 50% of all registrations, up from 48% in the same quarter a year earlier, though down slightly from the 53% seen in the last three months of 2011.

 

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Further to last Friday’s post on transport costs here is a more detailed breakdown on rail subsidies courtesy of the DfT.

Subsidy per passenger mile by Train Operating Company
a b c
Government Subsidy per passenger mile (pence) Network grant per passenger mile (pence) Total subsidy per passenger mile pence)
  2009-10 2010-11 2009-10 2010-11 2009-10 2010-11
c2c Rail -0.6 -1.1 7.7 7.1 7.1 6.0
Chiltern 1.5 -2.9 13.4 13.1 14.9 10.1
CrossCountry 3.6 1.6 16.0 15.2 19.6 16.9
East Coast -1.6 -5.8 6.9 6.5 5.3 0.7
East Midlands Trains 0.8 -1.7 15.4 14.2 16.2 12.5
First Capital Connect -4.6 -6.8 6.2 5.9 1.6 -0.9
First Greater Western -0.1 -3.0 10.0 9.2 9.9 6.2
First TransPennine Express (1) 9.3 8.4 14.3 12.5 23.6 20.9
London Midland 9.6 5.8 13.1 11.9 22.7 17.8
National Express East Anglia -4.2 -4.5 9.3 8.8 5.1 4.2
Northern 8.8 5.4 30.5 28.6 39.3 34.0
Southeastern 5.2 8.8 10.5 9.9 15.7 18.7
Southern 1.9 -4.0 7.9 7.4 9.8 3.5
South West Trains -4.2 -5.2 8.1 7.6 3.9 2.4
Virgin 1.5 -4.7 9.4 8.4 10.9 3.7
Total DfT franchised TOCs 0.7 -1.8 10.7 9.9 11.4 8.1

The DfT is blunt about the point of subsidies:

“It is right to use subsidy to buy desirable outcomes for passengers that the market would not otherwise deliver, but subsidy should not be used to mask inefficiency.”

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Notes to the table:

Input indicator

  • Latest headline data: The total subsidy to DfT franchised TOCs in 2010-11 was 8.1 pence per passenger mile
  • Publishing schedule: annually, August each year
  • Information broken down by: DfT franchised Train Operating Company

Latest data

  • a) Subsidy paid directly to TOCs by Government Figures published by ORR in the National Rail Trends Yearbook (Table 6.2c) based on passenger kilometres, converted to miles.
  • b) An allocation of the network grant (that is, payments made directly to Network Rail)
    This is calculated by taking the total network grant, apportioned according to each franchise’s share of Fixed Track Access Charges.
  • c) Total subsidy per passenger mile (a + b)

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Just to prove that there is nothing new under the sun here is a picture of a 1901 Coumbia electric car on display at the Royal Automobile Club.

It might be described as the Renault Twizy of its day: small, fun, battery powered and slightly lacking on the door front!

The car had a top speed of 28mph and its open lead acid batteries gave a range of 45 miles with a recharge possible overnight. It could have been yours for $650. In today’s money that is very roughly £11,500, while the Twizy starts at £6,700 to buy plus battery lease fee of £480 a year.

This vehicle was first bought by Queen Alexandra to drive around the grounds of Sandringham House in Norfolk. It was later purchased by a Mr R G J Nash who made regular use of it in the 1940s when petrol was rationed.

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Every picture tells a story and the same applies with graphs. The chart below illuminates just how much the running costs of motoring have increased over time, over and above the rate of inflation. It is true that the cost of purchasing a car has fallen in relative terms leaving the ‘all motoring’ index pretty much in line with general inflation. However while a car purchase (such as changing vehicles) is often a discretionary spending choice which can be delayed, running a car tends not to be: you have to fill up the tank and insure your vehicles no matter how severe your financial situation.

The second graph shows how public transport fares have changed. They too have risen above inflation but not by as much as the running costs of cars.

Perhaps the main, depressing, conclusion to be drawn is that all travellers have seen costs shoot up.

Note: data comes from Office of National Statistics CPI charts.

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