Green fuel duty cut 'just a gesture'

The Chancellor's 20p reduction in the duty on bioethanol road fuel would have little or no impact on petrol pump prices, experts said today.

"This is really no more than a green gesture," said John Stubbs, head of technical policy at the AA.

"The Government likes talking about this kind of green product but there is really no market for it and, in any case, bioethanol can only make up 10% of fuel used in a car."

Bioethanol is alcohol produced by crop growth. A distillation of this grain can be added to petrol.

Mr Stubbs added: "It's designed to make petrol go further. At present it's vastly expensive to produce and there is no real market for it. Specialist fuel suppliers might be interested now, but I doubt if the big petrol companies would be involved.

"I can't really see this leading to reductions in the price of petrol at the pumps."

Simon Chapman, chief economist at the Freight Transport Association, said he was disappointed that Mr Brown had not done anything to "address the tax situation that leads to UK hauliers having to play on an unlevel playing field in Europe."

But Mr Chapman said he welcomed plans to look at employers' liability insurance.

"We have seen premiums rise by as much as 20% a year in recent times," he added.