Darling's fuel duty plan rocked by oil price rise

A surge in world oil prices places mounting pressure on the Chancellor to scrap plans for a rise in fuel duty next week.

Motoring groups claim that if he went ahead with a planned 2p a litre increase, car drivers could soon by paying as much as £5 a gallon.

The soaring oil prices came as Mr Darling is being buffeted by the credit crunch, rising government borrowing and a world economic slowdown.

The Chancellor, whose credibility is at stake after the Northern Rock crisis, now has less than five days to decide whether to go ahead with a range of punitive taxes on motorists.

The price for a litre of petrol has risen to 105.7p, compared with 88.32p a year ago, after the benchmark for Brent crude oil hit a record high of £51.09 ($102.61) a barrel.

With families already feeling the effect of higher food and fuel prices, he has been warned any further increase could damage Labour at the ballot box.

Business leaders, motoring groups, the National Farmers' Union and retailers all called on Mr Darling to think again about raising petrol duty.

Sheila Ranger, of the RAC Foundation-said: "The impact of fuel prices on family budgets is really severe." She added: "In some families we're talking about food or fuel."

Edmund King, of the AA, echoed the concern, saying: "Record pump prices already hit those on low incomes, rural, disabled and many car-dependent motorists, so an extra increase would be unjust, unfair and unnecessary."

Mr Darling's main pitch in the Budget will be that he and Gordon Brown are the best men to steer Britain through choppy economic waters ahead. He will contrast Labour's record with the uncertainty of handing control over to the untested David Cameron and George Osborne. But the Chancellor's room to manoeuvre is restrained by the global slowdown and the state of the Government's finances.

In his last Budget, Mr Brown forecast borrowing of £30billion in the next fiscal year. This was revised up to £36 billion by Mr Darling in November, and experts expect this target could be ratcheted up again to £42 billion on Wednesday.

With growth also slowing dramatically, spending is going to be very tight. At the same time, Mr Darling has very little immediate hope of easing the pressure on homeowners after the Bank of England left interest rates unchanged yesterday.