George Osborne dashes fuel price hopes

Drivers had their hopes of avoiding another petrol pump increase later this year dashed by Chancellor George Osborne today.

Motorists had wanted Mr Osborne to defer the planned August fuel duty rise in today's Budget.

But he said there would be no change to existing fuel duty plans.

He added that vehicle excise duty (VED) would rise by the rate of inflation, although it would be frozen for hauliers.

Road users are already forking out for record petrol and diesel prices and today's announcement from Mr Osborne was greeted with dismay by motoring groups.

AA president Edmund King said: "At a time of record prices at the pumps the August increase in duty is a budget blow-out which will force drivers off the road and could bring a summer of discontent for many.

"We have heard much about tax allowances but the increase in fuel duty makes no allowance for car-dependent, rural and disabled drivers.

"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, said: "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."

Petrol now averages 139.67p a litre, with diesel at 146.39p a litre.

The August rise, including VAT, will put another 3.62p a litre on prices at the pumps, meaning that a typical 50-litre petrol refill will cost £1.81 more.

Quentin Willson, national spokesman for campaign group FairFuelUK, said: "The Government has turned its back on families and businesses all across the country - three-quarters of the electorate who want lower fuel prices.

"It ignores the threat of rising global oil prices - even the Saudis are trying to pull down the price of crude. And it ignores robust research we gave to the Prime Minister showing that cutting duty will create jobs, improve GDP and cost the Treasury absolutely nothing."

He went on: "This is a mortal wound for this Government's policies and its credibility. We showed them that cutting fuel duty by 2.5p would create 175,000 new jobs. How many jobs will be destroyed when the Government slaps 16p per gallon on in August?"

Road Haulage Association chief executive Geoff Dunning said: "The Chancellor's decision to go ahead with this rise is not only disappointing, the reason behind it is hard to understand."

Labour Treasury spokeswoman Cathy Jamieson said: "George Osborne says he can afford to give a tax cut for people earning over £150,000, but he can't afford to cut fuel duty for hard-pressed families.

"Drivers already facing record petrol prices are now facing a 3p rise in fuel duty in August. Labour's five point plan for jobs includes a temporary VAT cut which would take 3p off the price of a litre of petrol - and jump-start our stalled economy."

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