Can Osborne afford to gamble on fuel duty rise?

23 Nov, 2012 4:51pm Chris Ebbs

Calls for the 3ppl rise to be shelved amid fears of its effect on the economy

Attempts by Labour to delay the 3p per litre fuel duty rise in January have failed after it lost a vital vote in Parliament.

The party was hoping to get the price hike pushed back until April, but was defeated in the Commons by 282 votes to 234.

Labour claimed that going ahead with the rise would stretch already hard-pressed families.

During the debate, Cathy Jamieson, shadow economic secretary, attacked George Osborne and David Cameron, saying: “The Chancellor and Prime Minister might never have had to worry about the cost of filling up their cars, but millions of people across the country worry about that every day.”

Any rise would be a big gamble for Osborne, who faces a backlash from his own MPs over the hike. And it could also mean large-scale job losses in the UK: according to the National Institute of Social Research, increasing prices could put up to 35,000 people out of work.

However, a number of Tory backbenchers have hinted that Osborne could delay the rise in his Autumn Statement, on 5 December, pointing out his form of cancelling previous increases.

Robert Oxley, from the Taxpayers’ Alliance, also believes that the risks involved mean that Osborne can’t afford to go ahead. “I think it’s a given he will delay it. If he doesn’t, there will be absolute uproar. He has to ease the pressure on hard-pressed motorists,” he told us.

While the delay looks likely, Oxley wants to see it go further. “A freeze would be acceptable, but we’d like it cancelled, or even cut,” he said.

There was some respite for motorists, however, as another supermarket fuel price war has seen an average 2p per litre cut on petrol prices.