Government scraps rise in fuel duty

Chancellor George Osborne today announced that the government has cancelled plans to increase fuel duty by 3p in August.

by Michael Northcott
Last Updated: 19 Aug 2013

Most of us thought fuel was overpriced even before the recession hit, but with the price at the pump increasing considerably every year (and having just hit record highs back in March), motorists really have been feeling the squeeze. In another U-turn, the coalition government has decided not to go ahead with its increase of 3p per litre, instead choosing to freeze fuel duty until the end of the year.

The U-turn will no doubt fuel criticism that the government cannot come up with a policy and stick to it. But the government is always blabbering on about growth (and doing very little of substance actually to stimulate it), so this particular U-turn on an expensive extra tax will no doubt be welcome by everyone. It’s worth remembering that the government operates a perpetual tax escalator with fuel duty, meaning that a freeze is effectively a cut in duty. 

Fuel has become something of a minefield for the government, which has been criticised for deploying rhetoric about supporting the ‘squeezed middle’ earners whilst hiking up the cost of things like fuel, which hit the wallet the hardest. Add to that, once the ‘cash for Cameron’ scandal broke some months ago, government minister Francis Maude effectively precipitated a petrol crisis by hinting that a fuel tankers’ strike was imminent. So it’s fair to say that the government is earning something of a crude reputation for its handling of this politically important industry.

Fuel has traditionally created a political battleground, and Labour ministers pounced on the latest U-turn as further evidence of an incompetent chancellor. But Conservatives were quick to point out that under Labour’s manifesto plans, fuel would cost 10p per litre more than it does currently. Nonetheless, the rising commodity cost of fuel has meant falling sales anyway. Good for the environment at least...

If only the economy would show some sign of coming back to life, perhaps the government wouldn’t have to try penny-pinching through fuel, pasties, caravans, and grannies…

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