BUSINESS and motoring groups yesterday welcomed chancellor George Osborne’s plan to scrap September’s planned fuel duty hike, sustaining a freeze that has been in place for two years.
In his Budget speech yesterday Osborne cancelled the 1.89p a litre fuel duty increase – due to come into force at the start of September – handing a reprieve to motorists and small businesses already contending with higher fuel prices.
“Petrol will now be 13p per litre cheaper than if we had not acted over these last two years to freeze fuel duty,” Osborne said in his Budget speech. “For a Vauxhall Astra or a Ford Focus that’s £7 less every time you fill up.”
Scrapping increases in fuel duty over the past two years has cost the government £6bn in revenue to date, he said yesterday.
In the 2011/12 financial year, government coffers were boosted by £26.80bn from the duty, up from almost £11bn in 1991/92, according to official figures from HM Revenue & Customs.
The government currently earns 57.95p per litre of fuel, a level that has remained broadly flat since the start of parliament in 2010.
Richard Baron, head of taxation at the Institute of Directors, yesterday welcomed the freeze, adding that “costly fuel kills jobs”.
“At a time when energy prices and other bills are rising, the prospect of it becoming even more expensive to get to work or deliver goods was a daunting one,” he added.
John Cridland, head of the lobby group the Confederation of British Industry, said Osborne was right to help soften the impact of rising crude oil prices.
“Freight operators, small businesses and hard-pressed families up and down the country will feel the benefit of this freeze on fuel costs,” he added.
Motoring group the RAC also applauded the move, as technical director David Bizley said it was “great news that the chancellor is not trying to reverse the underlying downward trend in fuel duty revenue by simply clawing back more money for the Treasury per litre”.
Osborne has been under pressure from MPs – including MP for Harlow Robert Halfon, who has been campaigning for lower duty – to keep fuel duty low as rising oil costs lift fuel prices, putting extra pressure on already stretched households.
The chancellor had scrapped a 3p rise originally planned for January in December’s Autumn Statement.
Fuel tax typically makes up around 60 per cent of a litre of fuel, while the average price of a litre of petrol is 138.42p and 145.24p for diesel, according to the AA.