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

    Comment number 50.

    Yet another Omnishambles from this incompetent government, voted into power my a small minority of the population.

    If they can do 5 U-turns since the budget then they can also do a U-turn on their daylight robbery of public sector pensions.

    And maybe they will also do a U-Turn on their tax cut for millionaires?

    Or maybe not!

  • rate this

    Comment number 47.

    Wsnt it Thatchers lot what started the fuel esculator, I cannot see what the Tory/lib government are trying to do, they have made so many mistakes and are talking about hitting the poor and letting the rich get away without paying taxes, who in their right mind would vote for this shambles at the next election if they get in next time you might as well give up and go back to living in the caves.

  • rate this

    Comment number 38.

    It sounds to me that Balls got wind of the Tory plan to freeze the duty increase and has slyly tried to turn this into a U turn by George. It is good news on the one hand but has aleways been bad news to have this form of regular increase ( a Labour policy!) Whether this is a U turn or not is nothing by comparison to the Labour Party U turn on immigrant workers. That was a real U turn.

  • rate this

    Comment number 5.

    >he's being pragmatic or not, theres always going to be those who are going to be accusing him of a u-turn. If he had stuck to his guns, you'd have criticised him anyway for being out of touch with the public. Make your damned minds up, people.

    In light of your earlier tweet Nick, I'd be intrigued to see how Tom Bradby is reporting it and how much stick he gets. Lessons to be learned, old chum...

  • rate this

    Comment number 27.

    The anti-Tory bleating is all well and good, but the simple fact of the matter is that, when it matters, nobody of sound mind is going to actually vote for Milliband and Balls to run the country.

    Get real.


Comments 5 of 135



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