George Osborne told MPs in the Autumn statement he “expects” insurers to pass on savings of £40 to £50 per motor insurance policy to consumers once the changes are in force from April 2017.

Motorists could see their insurance premiums slashed by up to £50 a year after George Osborne unveiled plans to axe cash claims for minor whiplash injuries.

Chancellor George Osborne said the Government will look to end the right to cash compensation, making it harder for people to be rewarded for exaggerated or fraudulent whiplash claims.

This will save the insurance industry more than £1 billion from the cost of providing motor insurance and stop honest motorists paying higher premiums to cover the claims of dishonest ones.

Mr Osborne told MPs in the Autumn statement he “expects” insurers to pass on savings of £40 to £50 per motor insurance policy to consumers once the changes are in force from April 2017.

The Treasury will also make changes to allow more injuries to be able to go to the small claims court, by increasing the upper limit for these claims from £1,000 to £5,000.

It estimates that whiplash claims cost the insurance industry £2 billion a year, or £90 per policy, which it said is “out of all proportion to any genuine injury suffered”.

Treasury figures show the Government will lose between £35 million and £55 million a year in tax as insurance premiums fall as result of the reforms, which will be subject to a consultation.

Huw Evans, the director general of the Association of British Insurers, said: “This is a significant breakthrough in tackling the compensation culture and is good news for motorists.”

Recent research by the AA found that 11 per cent of motorists “saw nothing wrong in claiming for an injury following a collision caused by someone else, even if no injury was suffered”.

Stephen Gaywood, the AA’s director of counter-fraud, said: “By giving successful personal injury claimants care such as physiotherapy, which compensation is supposed to pay for, those out to make a fast buck from an injury claim that may not have happened, will immediately be discouraged. However, those who have genuinely suff
ered injury will get the treatment they need.

Car accessories from Autoworld in Bolton alongside the AA

However, Mr Gaywood warned that claim firms could find ways around the existing legislation.

He said saving £40 to £50 on the average cost of a car insurance policy is a worthwhile aim but there remains still much to be done to curb other forms of insurance fraud – such as ‘ghost broking’ and making false, fraudulent, statements when applying for insurance cover.

But the changes come just weeks after the Government increased the Insurance Premium Tax (IPT), which some have estimated could see families pay an extra £100 a year in cover.

The standard rate of IPT – the tax paid each time an insurance policy is purchased in the UK – increased from 6 per cent to 9.5 per cent from November 1, affecting policyholders including motorists, home owners and pet owners.

Separately hundreds of millions of pounds will be set aside every year to fill in potholes on British roads.

Autoworld In Bolton Talks About Potholes

Mr Osborne unveiled the additional £250 million of funding over the next five years for the “permanent” scheme.

However motoring groups said it was not enough. RAC chief engineer David Bizley warned it was “no more than a drop in the ocean in terms of the scale of the problem”.

He said: “The Government’s own estimated backlog for repairing local roads is up to £8.6 billion, which shows the scale of the funding shortage. We urge local authorities to use this money wisely by carrying out preventative maintenance rather than just short-term remedial repairs.”

AA president Edmund King claimed the announcement was “a sticking plaster approach”.

He said: “The fund may fill 5,000 holes in Blackburn but it won’t cover the national maintenance backlog by a country mile.”

Increasing numbers of cyclists are being killed on British roads because local authorities are failing to repair potholes. More than 3,400 cyclists have been seriously injured or killed in the past 12 months, up by 1 per cent on the previous year and by a third since the mid-2000s, while other accident rates declined

Research published by The Telegraph last year found that at least 40,000 drivers claimed compensation from councils for damage caused by potholes in 2013, up from 26,000 in 2012.

The number of motorists securing pay-outs from local authorities rose sharply in 2013 amid months of severe weather and warnings by councils of a giant “backlog” of road repairs.

However, despite the surge in claims, councils cut the amount they actually paid out in compensation – with the average driver receiving just a sixth of the sum given to those whose cars were damaged by potholes in 2012.

Last year David Cameron, the Prime Minister, announced that local authorities will be given an additional £140 million to help repair roads following one of the wettest winters on record.

Diesel fume issues in Bolton that may be solved by purchasing diesel fuel from Autoworld in Bolton

Employers will also be forced to pay more to give their workers diesel cars for another six years in a move that will save the Treasury £1.36 billion, Mr Osborne announced.

A 3 per cent “supplement” on diesel company cars which was due to be lifted in 2016 will now remain in place until 2021.

The Chancellor pointed to “slower than expected” progress from the European Union bringing in rigorous emissions tests.

Tax experts warned the surprise move would increase the burden of providing cleaner company cars on employers.

It comes after the VW emissions scandal which saw the company admit it had fitted devise to help their cars pass pollution tests.

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