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Last Updated: Tuesday, 20 July, 2004, 18:01 GMT 19:01 UK
Fuel duty rise postponed by Brown
Customer at petrol pump
Any rises at the pump have been deferred
The controversial 1.42p a litre fuel duty rise planned for September has been postponed, the Treasury has said.

Instead, it will remain under review until the pre-Budget report in November when Chancellor Gordon Brown reports back to the House of Commons, it said.

The next Organisation of Petroleum Exporting Countries (Opec) meeting, on which the review was to be based, has been delayed from June to September.

The chancellor will now wait for the outcome of that meeting before moving.

125m cost

A Treasury spokesman said: "We have sought to await the outcome of this month's Opec minister's meeting before making a further statement."

Tory shadow chancellor Oliver Letwin said: "The chancellor said it was not appropriate to raise fuel duty when fuel prices were volatile. They remain high and volatile.

"I am glad he has accepted our view that any rise would be unacceptable at present."

Last month Mr Brown left open the option of postponing the rises in fuel duty due in September.

He said the focus should be on persuading Opec to get world prices under control, but he would review progress in August.

Opec has previously agreed to raise production by 2m barrels a day.

Delaying the duty increase will cost the Treasury an estimated 125m.

Uncertainty over prices?

Friends of the Earth accused the government of lacking "joined up environmental thinking".

"We are very disappointed that the chancellor has chosen to retreat in the face of opposition to this important policy decision, especially on the day when the transport white paper confirms that fuel prices are one of the most effective means of limiting the environmental impact of transport growth," a spokesman said.

But Bert Morris, deputy director of The AA Motoring Trust, said: "This is really good news for motorists at a time when there is still a lot of uncertainty in oil and fuel prices.

"British motorists have to pay the highest level of fuel tax in Europe and we firmly believe that there should be no further increase till the rate compares more favourably to the European norm."

On Tuesday, Treasury Minister John Healey said in a written statement: "Because of its environmental benefits the government remains committed to the introduction of sulphur-free fuel and will be in discussion with the industry over its availability across the country.

"The chancellor will also report back on this issue at the time of the Pre-Budget Report."

The BBC's Lisa Hampele
"The road haulage association has welcomed the freeze"

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