Business

Autumn Statement: Fuel duty frozen until May 2015

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Media captionGeorge Osborne announces next year's planned fuel duty rise of 2p per litre will be cancelled

Fuel duty has been frozen by Chancellor of the Exchequer George Osborne until May 2015 in a widely-expected move.

He had first floated the idea of helping motorists with petrol and diesel costs in September.

Fuel duty will remain at 57.95 pence per litre - where it has been since March 2011.

The move comes after it was announced the tax disc, which shows motorists have paid vehicle excise duty, is to be replaced by an electronic system.

The new system - expected to come into effect in October 2014 - will allow people to pay the charge by monthly direct debit.

Mr Osborne said the move on fuel would "help those who drive a car".

"I said earlier this autumn that if we could find the money, I'd like to go on freezing duty," he said.

"Today I can report that because we have taken difficult decisions to control the public finances, I can deliver on that promise."

He also claimed the coalition government - which came into office in 2010 - had reduced the cost of a tank full of fuel by £11 through a series of restrictions on the levy.

The duty will now be frozen for the life of the current Parliament, until May 2015.

'Highly volatile'

Prof Stephen Glaister, director of the RAC Foundation, said the news would "be welcomed by 36 million UK drivers, not least the record number of workers who now commute by car, some 17 million in total".

He added: "But 60% of the pump price is still taxation and about 7% of all the chancellor's income comes from motorists. Whichever way you look at it, drivers are doing more than their fair share to prop up government spending."

Meanwhile, the AA public affairs head, Paul Watters, said the move would help offset some of the impact of "highly volatile pump prices" over the past two years.

He said that pump prices had shot up by 8p to 10p a litre on occasions during 2012 and 2013 and had sapped drivers' ability to get by.

"Up to 76% of AA members have had to cut back on car use, other spending in the family budget or both," Mr Watters said.

"Let's now hope that the players in the oil and fuel markets don't cancel out the chancellor's generosity."