Chancellor responds to pressure over fuel duty

 

UPDATE: The Treasury is making clear that the planned 3p fuel duty rise due in August has now been postponed until January 2013. Postponing planned rises is the way that the duty has been frozen under this government and the last one.

Ministers have taken the decision even though oil prices are currently falling worldwide. The price of crude oil has been falling steadily since March/April. The most recent peak was at above $125 a barrel for Brent crude, the leading benchmark. Falling demand, with a weakening global economy, has now seen that drop to today's $92 a barrel.

At the pump, unleaded had been above 142p a litre. Yesterday the average price of unleaded petrol was 132p a litre. This week Asda and Tesco have both been cutting prices, with Asda promising not to charge more than 127.7p a litre.

The Treasury points out, however, that pump prices are still mainly above the level at the time of the Budget of 2011, when the chancellor took the decision to scrap the so-called fuel duty escalator which produced automatic above inflation duty rises.

The cost of the latest decision is £500m and the Treasury claims that it will be paid for by higher-than-expected departmental savings.

The government was facing a vote in the Commons on fuel duty in which it would have been opposed by Labour and some Tory backbenchers. Half a dozen Conservative MPs had signed an Early Day Motion calling for a duty freeze. This morning the shadow chancellor called for the duty to be frozen in an article in The Sun and on Radio 4's Today programme.

In the last few moments Ed Balls welcomed what he described as another U-turn to join those on pasties, churches, caravans and skips.

Only a few days ago the Transport Secretary Justine Greening said that she would not be calling for a freeze in duty.

15:21: The Chancellor of the Exchequer has just announced in the Commons that he will not proceed with the planned 3p increase in fuel duty this August.

In his Autumn Statement George Osborne postponed a scheduled 3p rise in fuel duty for January but said that the planned rise this Summer would proceed - even though it would be cut from 5p to 3p.

He has now responded to pressure from some Tory backbenchers and The Sun newspaper who were joined by Labour today when Ed Balls called for the duty to be frozen.

This comes on a day when official figures showed people's standard of living dropping. Petrol is for many families the largest contributor to a squeeze on their incomes.

 
Nick Robinson, Political editor Article written by Nick Robinson Nick Robinson Political editor

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  • rate this
    0

    Comment number 135.

    134.TheGingerF

    " took a quick look at 50, for 'context', and can't see the reference to Labour anywhere."
    ===
    Your "quick look" analysis up to it's usual standard.

    Post 50 queries the validity of the govt voted for by a "small minority", which wrongly implies that there is a more valid alternative with more than "small minority". Which party do you think this could be ????

  • rate this
    0

    Comment number 134.

    Sorry Strictly, took a quick look at 50, for 'context', and can't see the reference to Labour anywhere.

    Are you combining selective quotation (based on what interests you) along with imagining words in other posters posts?

    Each to their own I suppose.

  • rate this
    +1

    Comment number 133.

    132.TheGingerF
    "what about the other bit of my 125, showing my balanced view on the topic. Did you miss that ... ?"
    ===
    No. I just didn't think it was relevant or interesting.

    "anyone who thinks it would have been a good idea for Labour to have clung onto power in 2010 based on 29% of the vote ... is at the very least, slightly pickled."
    =====
    That would be James in post 50.

  • rate this
    +1

    Comment number 132.

    And Strictly @ 129, what about the other bit of my 125, showing my balanced view on the topic. Did you miss that as you trawled through the 'context' of this thread?

    If you're bothered, my view is that anyone who thinks it would have been a good idea for Labour to have clung onto power in 2010 based on 29% of the vote and 256 seats, is at the very least, slightly pickled.

  • rate this
    +1

    Comment number 131.

    #129SP
    "James describes as a "small minority" in post 50. Presumably he thinks Labour should be in power with an even smaller minority"


    Yes, there are a lot of contributors complaining about the Govt, 'not being elected' etc, but I'm fairly certain that had Brown managed to cling on & formed the highly dubious 'rainbow coalition' we would not have heard a peep from them.

  • rate this
    0

    Comment number 130.

    Ossy knows that if he had put the tax up he would be lynched by his own party. That want to keep their nice little jobs in parliament otherwise they may have to look for real employment.
    He is scared...sends a junior minister to be butchered by Mr Paxman rather than explain his erratic decisions and discredited budget speech.

  • rate this
    +1

    Comment number 129.

    125.TheGingerF
    "just pointing out that the 2010 results weren't really in favour of any one party, either in terms of votes or seats."
    ====
    Thanks for sharing this insight, I'm not sure why you do so, given the context of the comments made in response to what James describes as a "small minority" in post 50. Presumably he thinks Labour should be in power with an even smaller minority.

  • rate this
    +1

    Comment number 128.

    re#113
    It was a bit stooopid of EdB to ask for postponement then complain about U-turn afterwards!

    Numpty Labour .....

  • rate this
    +1

    Comment number 127.

    re#118/120
    If I recall correctly, diesel was originally taxed less than petrol (no-one except enthusiasts & truckers wanted dirty diesel + extra engine cost) but then incrd. duties caused a switch to diesel for savings + its used more in Europe anyway.

    So CoE decided to milk it ...

    Nuff said!

  • rate this
    0

    Comment number 126.

    re#120
    Taxation causes behaviour change. For decades, because fuel was essential to everyday life, CoE's got away with continual duty hikes and used it also to finance low rates of top tax & occasionally cuts lower down.

    In internet, LPG, hybrid & elec. era, any increase like last 4/5yrs accelerates decline of use.

  • rate this
    0

    Comment number 125.

    AndyC555@122

    Andy, calm down a bit, I'm not whining about mandates, just pointing out that the 2010 results weren't really in favour of any one party, either in terms of votes or seats. The fact that Labour got a majority in 2005 with only 35% of vote shines a light on how rubbish FPTP can be in terms of democratic mandate.

  • rate this
    0

    Comment number 124.

    re#115y
    The other big reason GO may have postponed FD incr is dire Local Authority situations. Many LA services arrive at point of fossil-fuel burning vehicle, esp. elderly care. Fuel at record levels with LAs forced to have no incr in CT for 2yrs + budget cuts must make life v.difficult.

    Incr. 1997-2007 in CT by 50%+ in most LAs was in large part due to FD/FDE.

  • rate this
    0

    Comment number 123.

    @121
    In hurlyburly of Westmonster [oops typo but I think I'll leave it ;-) ] village, I'm sure its forgotten until too late, ie 1 Dec that many Benefs are linked to inflation applicable to aut/winter RPI/CPI.

    Last year, there was a bit of a flap because GO had to up Benefits by large %. I may have been boring posters rigid w/FD&inflation related posts for years but it is important economics!

  • rate this
    0

    Comment number 122.

    "Waaaah, it's not fair"

    "TheGingerF
    Once you remove the dont knows and the plain lazy from the 2010 results then 1 in 4 of eligible voters said Tory, 1 in 5 Labour and 1 in 6 LibDem. Not much of a mandate for any manifesto really"

    Something similar could be said about 2005 and every election

    Like I say, you only whine about mandates and it not being fair because Labour lost.

  • rate this
    0

    Comment number 121.

    Up2cynical @ 119

    I'm glad you suggested that and not Nick, cos then the BBC bias headspinners would have gone into the stratosphere ;-)

    You've got me thinking about it now though......

  • rate this
    0

    Comment number 120.

    118

    The difference is to do primarily with the refining process and also the capacity to refine - we currently have more capacity to refine petrol than we do diesel, although there is arguably higher demand for diesel. So, the price goes up. Then theres the difference in duty rates. Thats the long and short of it, I think.

  • rate this
    0

    Comment number 119.

    re#115
    Another reason may have been whispered in GO's ear by a clever Treasury official: "If you want to reduce your Benefits bill, if you keep inflation low through September to the beginning of December, you will at least stop Benefits increasing by as much as they would if you go ahead and increase fuel duties in August."

  • rate this
    0

    Comment number 118.

    on a purely practical point why are diesel and petrol different prices and not the same. In europe, having driven on the continent for several years; there is a difference in the other direction. And yes we have noticed that fuel prices havent come down as fast as oil prices. And a little piece of history, Deisel was at £1.179 in March 2010 Brent Crude was $79

  • rate this
    0

    Comment number 117.

    110&111
    Once you remove the dont knows and the plain lazy from the 2010 results then 1 in 4 of eligible voters said Tory, 1 in 5 Labour and 1 in 6 LibDem. Not much of a mandate for any manifesto really, especially when no majority of seats won.

    Luckily the Torlylition was formed and policies are now made up as they go along with no need to reference any pesky manifesto or indeed budget.

  • rate this
    0

    Comment number 116.

    re#115
    On my latter point, yesterdays postponement may have been driven by any number of factors.

    One might be extremely hard-pressed emergency services, especially the police, brought almost to breaking point by the record prices in April. C.Constables in some areas were being forced to cut back activities and/or manpower, partly by budget cuts but also by a rocketing fuel bill.

 

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