It looks like Chancellor George Osborne could delay plans to increase fuel duty by 3p at the turn of the near year until April. It had been hoped by Shadow Chancellor Ed Balls that Tory MPs would support him in a call to postpone the fuel duty hike by three months. He argues that the £350 million the freeze will cost will be paid for by getting rid of tax loopholes.
Labour also tried to put pressure on the government before a debate and vote today. Labour Shadow Chief Secretary to the Treasury Rachel Reeves says it wouldn’t be right to go ahead with another tax hike on families and businesses with the economy so fragile and prices still on the rise faster than wages. Labour has called for a temporary reduction to VAT to drop fuel prices by 3p per litre and boost the economy. If this isn’t done, the least ministers could do is delay the fuel duty hike until at least April. This can be paid for by getting stricter on known tax avoidance loopholes, like those used to falsely inflate costs. She added a call on all MPs to vote with their motion and gives motorists some much needed relief.
The Treasury has insisted that no guarantees have been given over the matter. They understand that petrol prices are a large part of household budgets, which is why they have kept fuel duty 10p per litre below plans initially put in place by Labour. The deficit has to be dealt with, but they always help hard-working families wherever possible. This is why they have capped rail fares, raised the personal allowance and frozen council tax as well.
Conservative MP Andrew Percy says that Osborne has made it clear that he’s aware of the strong feelings towards the fuel duty hike. Tory MP Philip Davies said that he suspects the Chancellor will delay the increase, and he will be listening to what he says during the Commons debate. Tory colleague Tracey Crouch added that talks with the Treasury have been very positive, and she hopes Osborne does the right thing – though they appear to be listening.
This comes as the average price of unleaded is just under 140p per litre. On top of this, consumer group Which? has revealed that 85% of motorists are worried about the rising price of fuel. It has also found that 8.7 million households reduced their spending on essentials in October, and some 6.4 million had to use some of their savings in order to cover expenses. The number of people who say they will cut back on vehicle operating costs increased seven percentage points to 39%.
Richard Lloyd, the executive director of Which?, says that the rising price of fuel is the number one worry among consumers. People are telling them already that they have had to cut back and use some of their savings just to get by. Consumers can’t afford another hit on household budgets, as they have already been hit by above-inflation food price rises and energy bill increases. They are calling on the government to think about their plans to raise fuel duty this January. The forthcoming Budget statement has to focus on actions that will help consumers keep more money in their pockets, as the recovery of the economy is at risk if consumer confidence isn’t given a boost.