MOTORING organisations have warned of further hardship for 34 million UK drivers after George Osborne's decision to plough ahead with a fuel duty hike in August.
The 3p increase, together with VAT, will add £1.81 to the cost of filling up a typical 50-litre petrol car and comes after new records for pump prices were set this year due to a surge in global oil prices. Petrol now averages 139.67p a litre, with diesel at 146.39p a litre.
The Chancellor's refusal to defer the increase brought condemnation from hauliers, business organisations and motoring lobby groups, who said it would cost jobs, hurt ordinary families who depend on car travel and damage the UK's economic recovery.
The Budget also included an increase to Vehicle excise duty (VED) in line with inflation, though it will be frozen for hauliers.
Edmund King, president of the Automobile Association, warned of a "summer of discontent" as the latest hike kicked in. "We have heard much about tax allowances, but the increase in fuel duty makes no allowance for car-dependent, rural and disabled drivers," he said.
"Only last week the Prime Minister told American students that UK fuel prices would make them 'faint', yet the Government seems intent on inflicting more pain for no gain on drivers.
"Ironically, such a hike in duty doesn't necessarily help Government finances as people will cut spending at the pumps and in shops, and it could fuel inflation."
Professor Stephen Glaister, director of the RAC Foundation, added: "The Chancellor's decision to go ahead with the summer rise in fuel duty is as unsurprising as it will be disappointing to 34 million drivers, especially when the Chancellor acknowledges there is likely to be a further spike in oil prices.
"George Osborne said that taxes should be fair, simple, predictable and support work. Motoring tax fails on at least three of these measures and it is time for a review of exactly what fuel duty is for and who it impacts most."
The Freight Trade Association (FTA) said the Chancellor had "squandered" an opportunity to create jobs. Simon Chapman, the FTA's chief economist, pointed to research showing that a 2.5p cut in fuel duty would have created 175,000 jobs, while there would be no cut in revenue to the Exchequer as fewer people would be deterred from driving.
However, that was challenged by sustainable transport charity Sustrans, which warned such a measure would cost the UK economy £2.75 billion in tax revenue that would have to be found elsewhere.
The charity, along with other environmental groups, backed the increase in fuel duty. Sustrans policy adviser Eleanor Besley said: "For many people, having a car is the only way to get to work, the shops or the doctor's as public transport simply doesn't exist.
"Families are being forced into owning a car they can't afford because travelling by train and bus can be expensive, unreliable and in many cases not even possible.
"We can't continue to have a transport system reliant on cars – as supplies of oil dry up the price of petrol is only going to go up and up. The Chancellor must steer through a transport system that keeps the whole country moving – not just those with access to a car."
The cost of petrol has increased by 24% over the last two years, while diesel has gone up 28%, according to analysis by the RAC. There have been six increases in fuel duty and two VAT hikes since December 2008, with only one cut, of 1p, implemented last year.
David Bizley, the RAC's technical director, said: "The Chancellor has put the heat on hard-pressed motorists this summer by completely ignoring calls to scrap the 3p duty increase planned for August. Drivers are being hit by record fuel prices on a daily basis with no sign of it ending.
"Tomorrow we are likely to see the average price of petrol crash the 140p a litre barrier, but the Chancellor has done nothing to help. This was the chance to do the right thing for motorists who pay around £45bn a year in motoring taxes – instead he's given them more pain at the pumps."
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