Osborne fuel duty U-turn

UK Political Editor

Wednesday 27 June 2012

George Osborne has scrapped the 3p-a-litre fuel duty rise set for August 1, in what Labour last night branded "the fastest U-turn in history".

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MICHAEL SETTLE UK POLITICAL EDITOR

The Chancellor made the surprise announcement to freeze fuel duty until January, just hours after Ed Balls, his Labour shadow, called on Tory rebels to help the Opposition defeat the UK Government in a Commons vote on the issue next week.

Motoring groups and campaigners welcomed Mr Osborne's move, but opponents accused him of another Budget cave-in after reversing plans to tax hot pasties, static caravans and large charitable donations.Quentin Willson, national spokesman for FairFuelUK said: "For months FairFuelUK has pushed, argued, pleaded and proved to the Government that scrapping the August duty rise would be essential to the economic future of this country. Thankfully, the Government has listened and has acted for the good of struggling consumers across the UK."AA president Edmund King said: "A duty increase at the same time as the Olympics would have cast a shadow over the UK."Andy Willox of the Federation of Small Businesses in Scotland added: "Every penny spent at the pumps is money not spent elsewhere in the economy."The Chancellor made the announcement in the Commons yesterday when he declared: "We are on the side of working families and businesses and this will fuel our recovery at this very difficult economic time. "The one-off cost of this change [£550 million] will be fully paid for by the larger-than-forecast savings in departmental budgets." However, it subsequently became clear the precise savings have still to be identified and will only be announced in Mr Osborne's Autumn Statement.Mr Balls said: "This is the fastest U-turn in history. Labour called for this help for families and businesses this morning and I welcome the fact that the Chancellor backed down this afternoon." Stewart Hosie for the SNP also welcomed Mr Osborne's announcement but accused him of "buckling" under pressure from a cross-party campaign. No 10 sought to justify the timing of the announcement by pointing out yesterday's Treasury Questions were the last before August 1 when the hike was due to come into effect.It explained the fuel duty issue had been discussed a month ago by Prime Minister David Cameron, Mr Osborne, Deputy Prime Minister Nick Clegg and Danny Alexander, Chief Secretary to the Treasury.However, the decision to scrap the 3p hike was not discussed at yesterday's Cabinet. It came after Mr Balls wrote a newspaper article criticising the tax.The PM's spokesman refused to say precisely when the decision was taken but emphasised that, in overall spending terms, £550m was just 0.01% of public expenditure.He said: "This should not be unexpected. This Government has taken time to consider the concerns of motorists. It has acted already. "As a result of that action the average pump price is about 10p lower than it otherwise would have been. This is something we have already shown is an issue we take seriously."The Government has previously called for fuel retailers to provide better details of their prices. It follows criticism that oil giants are too slow to lower pump prices if wholesale costs fall, but are swift to hike them in the event of world crises such as the Libya conflict last year.

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Osborne fuel duty U-turn

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