August fuel duty hike scrapped

The Government has scrapped the three pence per litre (ppl) fuel duty hike that was scheduled for August. The remarkable u-turn follows months of pressure from campaign groups, motoring organisations and MPs, who argued that motorists could not afford such an increase.

Chancellor George Osborne said the move – which will cost the Treasury an estimated £500 million – would be paid for from savings generated from the Coalition Government’s previous spending cuts. 

He said: “We are on the side of working families and businesses and this will fuel our recovery at this very difficult economic time for the world.

“The one-off cost of this change will be fully paid for by the larger-than-forecast savings in departmental budgets.”

The move only offers a six-month respite for motorists, though, as Osborne said the 3ppl hike will go ahead in January 2013, instead.

RAC Foundation director Professor Stephen Glaister said: “This is good news for drivers and good news for the country. Given that tax makes up around 60% of the pump price, falls in the price of oil were only ever going to go so far in easing the financial burden on motorists.”