Fuel Duty Rise Will Go Ahead

Transport Secretary Justine Greening has said that she’s not prepared to get in the way of the fuel duty increase set for August. This has indicated that the 3.02p tax rise will go ahead, making motorists pay even more for their petrol and diesel at the pump. The increase to fuel duty will mean families, who are already pressed for cash, will have to pay over £1.40 per litre for petrol.

This move has sparked fears that the UK could see a repeat of fuel protests like those held in September 2000. During the previous protests, petrol pumps ran dry after demonstrators blockaded several of the nation’s motorway networks. There had been fears of this happening earlier this year during threatened strikes by fuel tanker drivers over pay.

Greening says she wants to focus on pushing petrol firms to reduce the cost of fuel at the pump so that prices are brought in line with the falling cost of oil. The duty they receive is what funds the public services everyone rely on. It’s better to challenge petrol companies to pass on the falling cost of oil to motorists. She thinks it’s probably the most important move. She added that it’s important the Treasury focus on reducing the deficit in light of what’s going on in some European nations.

If the increase is pulled, ministers will have to find £1.5 billion to fill the income gap. However, Prime Minister David Cameron has been under pressure from senior ministers to scrap the fuel duty increase over concerns it will damage political support from poorer voters. Some 50 MPs signed a Commons motion calling for the rise to be axed. Some proposals have included reducing the 3p increase to 1p or 2p and deferring all or part of it until next spring.

The Scottish Chambers of Commerce has supported the action to drop the fuel duty increase. Liz Cameron, the chief executive, said it would be a welcome move for businesses, which are having to battle high transport and utility costs during a time of subdued domestic demand. However, Treasury chief secretary Danny Alexander explained taxation on fuel is 10p per litre less right now than it would have been if the plans set out by Labour had remained in place. Given the huge issues they have with public finances, they need to ensure they have the money coming through the tax system. The fuel duty increase is part of that, he added.

Right now, fuel duty makes up 57.95p per litre of unleaded petrol and diesel prices, and VAT adds another 20% – which is currently about 24p. If fuel duty rises, then it will make up 60.97p per litre of pump prices. The fuel tax and VAT have kept petrol prices artificially high, even though the cost of crude oil has fallen. However, petrol prices have declined about 4p this month, for the second month in a row. Diesel is still at least 4p per litre more than in other European countries, though.

The drop in prices as of late is largely thanks to supermarkets, who have cut prices at their stations by 14p per litre since the end of April, taking nearly £10 off the cost of filling a family vehicle. Asda, Sainbury’s and Tesco announced on Monday that they would reduce their prices yet again. The AA says the fuel industry will have to prove that UK motorists are paying a fair price for fuel, as they are already under pressure from the government to make pump prices transparent.