Fuel duty increase is postponed

The planned 2p increase in fuel duty this October is to be postponed.

This is the second time it has been put back – it was due to be introduced in March, but was delayed for six months because of rising oil prices.

Alistair Darling said the move, which comes as oil prices continue to hit new peaks, would help motorists and businesses during difficult times.

The price of unleaded petrol has risen 25% over the past year and pressure has been mounting for duty to be cut.

The chancellor’s announcement came ahead of a Conservative-called debate on fuel duty set to take place in the House of Commons on Wednesday afternoon.

Months of misery

The Tories are proposing a “fair fuel duty stabiliser” which would lower the levy when the cost of fuel goes up and increase it when it drops.

The RAC welcomed Mr Darling’s announcement, but said: “It does not go far enough. We would like to see the chancellor not just postpone future rises but actually cut fuel duty.”

AA president Edmund King said: “We are delighted that the chancellor has seen common sense.

“The prospect of extra, government-inflicted pain was not something that road users were looking forward to.

“Many motorists have endured months of misery and this is a welcome piece of good news for them.”

Kate Gibbs, of the Road Haulage Association, said anything that helped the road haulage industry was “good news” although the postponement of the fuel duty rise represented “quite a small drop in the ocean”.

But Lib Dem treasury spokesman Vincent Cable said: “There’s absolutely no reason why the chancellor should have been stampeded into making this decision and we have no indication how it’s going to be paid for.”

The decision was disclosed in a response to a parliamentary question tabled by a Labour backbencher.

Mr Darling told the BBC News Channel: “It’s quite clear to me that oil prices, which are what’s driving the prices at the pump, are gong to remain high for some time yet.

“So I’ve reached the view that it’s right now, before the House of Commons goes away for the summer recess, to say that we’re going to postpone the increase that was due in October.

“I’ll look again at the matter again in the budget but I think that this is the right thing to do to help motorists and to help businesses.”

‘End uncertainty’

The prime minister’s spokesman said there were “lots of precedents” for announcements on fuel duty to be made before the parliamentary summer recess.

He said Mr Darling “decided to do it now because he wanted to end any uncertainty”.

It follows a series of demonstrations by lorry drivers demanding cheaper diesel. Figures show petrol prices have risen nearly a quarter during the past year, and diesel 36%.

AA figures suggest the cost of a litre of unleaded petrol averaged 119.5p across the UK on Tuesday, with diesel averaging out at 133p.

Earlier this month, Gordon Brown signalled that delaying the 2p rise was a distinct possibility when he said it was something he was looking at “very, very carefully”.