Fuel increase postponed

Wednesday, 6 July 2005 12:00 AM

The anticipated September increase in fuel duty has been postponed, the government has announced.

The fuel duty levy is reviewed yearly to keep it in line with inflation but chancellor Gordon Brown deferred the rise in his budget speech in March.

The question will now be revisited in the autumn pre-budget report, expected in November, Treasury financial secretary John Healey has said.

It was frozen last year because of the "volatility in the oil market", he added.

With crude oil prices hovering around the $60 a barrel mark in the last week few weeks, the Treasury has decided to adopt a wait-and-see approach.

The Treasury claims fuel duty has not risen in real terms since 1999 and was last changed in October 2003.

The freeze is expected to include rebated oils, biofuels and road fuel gases.

Shadow chancellor George Osborne welcomed the Treasury's decision, saying: "This is welcome news for motorists and businesses in the UK, but we must not forget that we already have the most highly taxed fuel in the EU."

Edmund King, RAC Foundation executive director, added: "Record world oil prices are already hitting millions of motorists in the pocket, and any increase would have fuelled inflation and anger among drivers."

But Friends of the Earth expressed disappointment, saying the cost of motoring had fallen by six per cent in real terms since Labour came to power eight years ago.

The environmental campaign group said the expected deferral sent the wrong signal about tackling climate change so close to the G8 meeting in Edinburgh.

The price of a litre of unleaded petrol is now close to 90p.

Tags: