Fears of spike in cost of fuel
FUEL prices are set to hit a record high, posing a threat to the economic recovery and meaning that many motorists cannot afford to fill up their cars – but chancellor George Osborne has ruled out cutting fuel duty in next month’s Budget.
The average forecourt price for a litre of diesel last week hit a record 143.7p, an increase of 26 per cent in the past two years. A litre of petrol currently costs 136.2p and is expected to break last May’s all time high of 137.4p within a month.
Fuel duty campaigners say the high cost of petrol is hitting families and damaging the UK economy. They are planning a day of protest in parliament on 7 March.
Quentin Wilson, spokesman for FairFuel UK, which represents the RAC and leading road hauliers, challenged Osborne to act, saying: “A cut in fuel duty will stimulate growth, create jobs, boost business confidence and, crucially, give the chancellor more overall tax yield as a result of the growth than he believes he might ‘lose’ as a result of the duty cut.”
Over half of the price of petrol goes directly to the Treasury in the form of VAT and fuel duty.
But Osborne hit back at the campaign yesterday, saying he has already put off several tax rises. “I have taken action this year to avoid increases in fuel duty which were planned by the last Labour government,” he said.
“That involved committing several billion pounds of resources and putting a tax on oil companies, precisely to ameliorate the impact of these high world oil prices on the British public.”
Supporters of the chancellor point out that he cut duty by one pence in last year’s budget and used his Autumn statement to announce that a planned three pence rise would be delayed until this August.
Brent crude prices have hit $125 a barrel after the EU announced trade sanctions intended to make Iran abandon its nuclear weapons programme.
Although the oil price remains below the 2006 high of $144 a barrel, a strong US Dollar has pushed the price in sterling up to a record £79.
The consequences have been seen at the pump, as UK fuel consumption dropped by 2.4bn litres in 2011, according to figures from the AA.