Darling delays fuel rise

Wednesday, 16 July 2008 12:00 AM

Chancellor Alistair Darling's planned 2p increase in fuel duty has been postponed from October.

This second delay follows the decision to postpone the increase for six months in March's Budget.

Mr Darling said: "The global credit crunch and sharp rise in world oil prices have pushed up prices at the pump. Today's decision will help motorists and businesses get through what is a difficult time for everyone."

The chancellor added: "This measure is taken in response to sharp rises in world commodity prices, with the price of oil almost doubling over the past year to reach a real-terms record high of $146 a barrel recently.

"This has inevitably had significant knock-on effects on the price of road fuels, which the government is committed to taking into account when considering decisions on fuel duties."

But the Tories accused the government of short-term political opportunism.

"After months of dithering, Alistair Darling has finally decided to postpone the 2p rise in fuel duty a week before the Glasgow East by-election," said shadow chancellor George Osborne.

As a result of the decision, main road fuel duty rates will remain at 50.35p per litre after October 1st.

The RAC has welcomed the news, but has demanded more action.

"This is welcome news but it does not go far enough," the driving body stated.

"We would like to see the chancellor not just postpone future rises but actually cut fuel duty."

A series of protests by lorry drivers against the decision are believed to have made an impression on the government, with Gordon Brown admitting earlier this month that the delay announced today was a distinct possibility, something that the government was looking at "very, very carefully".

Yesterday David Cameron unveiled Tory plans for tax duty to fall with rising oil prices.

He said: "At the moment, tax revenues rise and fall with the oil price.

"The increase in revenues from the North Sea more than offset any dampening impact high oil prices will have on tax receipts from the wider economy."

He added: "Oil goes up, the tax goes up, people feel all the pain - and the government gets all the gain. A fair fuel stabiliser will end that."

Liberal Democrat economics spokesman Vince Cable said: "The chancellor is now so scared of appearing indecisive that he has been panicked into making a snap decision on fuel duty.

"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."

But Labour MPs have been putting pressure on Mr Darling to climb-down sooner rather than later, when political pressure would have made the government look weaker.

Dr Caroline Lucas MEP, Green party principal speaker, condemned the decision.

"Once again, we're being held hostage by the big energy companies, and are paying for it at the pump," she said.

"If Darling cared about motorists or our future, he would reinstate the fuel duty rise but abolish the unfair road tax. He would levy a windfall tax on the massive profits the oil corporations are making out of our misery. And he would spend the money giving us the affordable, reliable public transport we desperately need."

A Downing Street spokesman has denied the delay has anything to do with the upcoming by-election in Glasgow East.

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