Government Postpones Fuel Duty Increase

Chancellor Alistair Darling has announced that a 2p rise in fuel duty, due to come into effect in October, has been postponed because of the global credit crunch and rise in oil prices.

The Chancellor said that the decision would help motorists and businesses "get through what is a difficult time for everyone".

It is the second time that the increase has been delayed, having previously been postponed in March.

Prime Minister Gordon Brown defended the decision in the Commons during Prime Minister's Questions, saying that the government would continue to help "hard-pressed families" affected by high food and fuel prices. His comments came in response to Conservative leader David Cameron's suggestion that the move was timed to coincide with next week's by-election in Glasgow East.

However, Shadow Chancellor George Osborne said: "After months of dithering, Alistair Darling has finally decided to postpone the 2p rise in fuel duty a week before the Glasgow East by-election.

"Instead of short term political fixes, what the government should be doing is adopting our plans for a fair fuel stabiliser so that motorists get automatic relief when the price of oil goes up, rather than relying on the political whims of the Chancellor.

"Now under pressure, he's u-turned on one of his car tax measures, surely it can't be long before he shows his weakness again and backs down on the VED rise on family cars."

Liberal Democrat Treasury spokesperson Vince Cable said: "The Chancellor is now so scared of appearing indecisive that he has been panicked into making a snap decision on fuel duty. It is utter madness to make an early decision when no-one knows either what the price of oil will be or what state the public finances will be in come the autumn.

"Delaying the fuel duty increase until next spring will cost the Treasury an additional £550 million. With the government already £45 billion in the red this year and most likely losing revenue from stamp duty, corporation tax and income tax, how will this be paid for? The government has no credibility over fuel duty. Labour froze fuel tax when oil cost $30, then $50 and then $140 dollars a barrel, citing high oil prices, while being content to see the tax rise at other times.

"Alistair Darling must explain what he thinks fuel duty is for."

However, the move was welcomed by the 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."

However, the RAC said that although the news was "welcome", it did not go far enough. In a statement, the organisation said: "We would like to see the Chancellor not just postpone future rises, but actually cut fuel duty."

(KMcA/JM)