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Comment: fuel on the fire of Labour's woes
Evening Standard27 May 2008
Regardless of whether today's planned demonstrations by hauliers snowball into a fuel protest like that of 2000, the issue represents a potentially dangerous new front for the Government. Fuel prices have soared, especially diesel - now averaging almost £1.27 a litre. And the damage is not limited to hard-pressed hauliers: higher transport costs inevitably filter through to food and other goods, pushing up living costs.
Labour backbenchers, their attention focused by last week's drubbing in Crewe, are also worried about the effects of planned increases in vehicle excise duty. The principle behind the rises, charging according to cars' carbon emission, is laudable, while the increases for most vehicles are less than £50 a year. But the psychological effect, together with soaring fuel costs, could be considerable - another 10p tax band row in the making, fear Labour MPs. They point out that the new tax rates are being applied retrospectively to cars bought since 2001, at a time when nobody could have foreseen carbon-based vehicle excise duty. Figures obtained by the Conservatives show that altogether, 18 million drivers face increased road tax.
Any climbdown will be risky for the Chancellor: he has already been forced into embarrassing retreats on tax. Nevertheless, there are solid reasons for postponing road tax increases and either trimming or postponing the fuel duty hike. Aside from giving drivers some welcome relief, such moves would be affordable. Simply deferring the fuel duty increase for six months would cost an estimated £550 million, yet, thanks to rising fuel prices , increased VAT revenues have already handed the Treasury a £505 million windfall in the first six weeks of this financial year alone. The Chancellor should act now to ease the pain.
