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Chancellor bows to pressure and scraps planned rise in fuel duty
Joe Murphy, Political Editor16.07.08
Alistair Darling today scrapped the 2p increase in fuel duty.
The Chancellor acted to quell motorists' anger with a week to go before the Glasgow East by-election.
"Today's decision will help motorists and businesses get through what is a difficult time for everyone," Mr Darling said.
However, although hauliers, business and motoring groups welcomed his decision, they urged more help to cope with soaring oil prices, which make filling a family car £20 more expensive than a year ago.
The RAC said: "We would like to see the Chancellor not just postpone future rises but actually cut fuel duty."
AA president Edmund King said: "We are delighted that the Chancellor has seen common sense.
"Many motorists have endured months of misery and this is a welcome piece of good news for them."
At Prime Minister's Questions this afternoon, Tory leader David Cameron challenged the Prime Minister to deny that the rise was being scrapped because of next week's by-election, where a safe Labour seat is at risk of falling to the Scottish Nationalists.
Gordon Brown replied that the Conservatives lacked the leadership to take tough decisions to protect the environment. "While we take tough action, he will run away," he said.
But Scotland's First Minister Alex Salmond said the move was all down to SNP pressure. "I think the Glasgow East by-election is concentrating their minds wonderfully in London," he said.
Soaring world oil prices mean that prices at the pump have been rising on average every five weeks by 2p a litre. Average petrol prices are currently in excess of 120p a litre with diesel around 132p a litre. Of that 55.35p goes into Treasury coffers.
Mr Darling's move was signalled in an exclusive Evening Standard interview two weeks ago, when he said he was very aware of the pain being suffered by businesses and households because of higher global prices for fuel and food.
He announced the 2p rise in duty in his Budget in March but said at the time that he would postpone it to October because of fears world oil prices could spiral upwards. Now it is being postponed again to the next Budget in 2009, effectively meaning it has been abolished for this year.
A barrel of oil was under $20 a few years ago but recently surged to more than $150 before falling back slightly. Today's price touched $137 a barrel.
The Freight Transport Association's external affairs director, Geoff Dossetter, said: "The scrapping of the increase at a time of high world oil prices was inevitable. However, at 50p per litre, UK diesel duty for commercial vehicles is twice the EU average of just 25p.
"The Government must now engage with the industry in order to find a practical means of bringing UK duty more in line with Continental competitors."
But Lib-Dem Treasury spokesman Vince Cable said: "It is utter madness to make an early decision when no one knows either what the price of oil will be or what state the public finances will be in come the autumn.
"Delaying the fuel duty increase until next spring will cost the Treasury an additional £550 million. With the Government already £45 billion in the red this year and most likely losing revenue from stamp duty and income tax, how will this be paid for?"
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The UK is suffering NOW because of the actions of this government and the Prime Minister and his Sheriff of Nottingham thinks by taking away a tax he hasn't even applied yet will make me feel better.
- Mr S. Port, London
