Osborne postpones fuel duty rise

21 March 2012

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27 June 2012 (Original story from 21 March below) | Adam Leach

UPDATE

Chancellor of the Exchequer George Osborne has announced that the increase in fuel duty announced in this year’s budget is to be postponed until January 2013.

In March, the chancellor announced a rise of three pence per litre in fuel duty, to come into effect from 1 August, despite significant opposition from businesses and the general public. However, he yesterday announced that the increase would be delayed until the start of next year. “This decision is the right action to help, families, businesses and the broader economy,” he said.

Responding to the news, Neil Bentley, director general at the CBI, said: “A fuel duty freeze will help to support road hauliers and freight transport operators, making delivering our goods that bit more affordable, and supporting the economy during the challenging months ahead.”

 HM Treasury said the shortfall that will arise as a result of the delay to the increase, which is estimated at around £500 million, would be made up by further cuts in departmental spending.


ORIGINAL STORY

21 March 2012 | Adam Leach

UK chancellor George Osborne has ignored calls to abandon the 3 pence per litre rise in fuel duty, meaning petrol prices will increase in August.

In his budget speech earlier today, the chancellor of the exchequer explained fuel duty would rise this August as outlined in the Autumn statement. He also said that if oil prices dropped below $75 a barrel the government will be able to increase fuel duty above the rate of inflation.

To support an area that will be hardest hit, he announced a freeze in vehicle excise duty for road hauliers. But despite this, some in the sector criticised the chancellor for “taking a wrong turn”.

Geoff Dunning, chief executive of the Road Haulage Association (RHA), said: “In the last budget, the chancellor seemingly understood the need to stop driving up fuel taxes and actually cut duty. This time, he seems to have done a complete U-turn. We are struggling to achieve any growth and pump prices have reached record highs – yet he is driving fuel costs even higher.”

Dunning added that the industry would now look to pass the increased costs on to buyers. “[These are] costs that hauliers must now set about trying to recover from their hard-pressed customers,” he said.

Martin Rawlings, director of energy consultancy Blizzard Utilities, told SM that while the freeze in vehicle duty might appease hauliers to a point, he can foresee the potential of strikes. “[The freeze] may have an equalling effect, but it’s only frozen – he’s not reducing it. I wouldn’t be surprised if we see demonstrations from hauliers.”

Also in the budget, the chancellor confirmed that the eight per cent rise in air passenger duty would go ahead, despite concerted lobbying by the air travel industry for the government to reverse or lower it.

Speaking to SM, Paul Tilstone, chief global development officer and European managing director at the Global Business Travel Association, said: “Any increase ultimately hits the buyers’ bottom lines and any increase at this time is broadly unwelcome. While we understand the need for the government to raise revenue, we also hope it understands the implicit link between business travel and economic growth.”

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