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Monday, 6 November, 2000, 02:35 GMT
Fuel tax freeze 'rumours' dismissed
Drivers wait at an Esso station in London
Wait and see: What will Brown's statement offer motorists?
The government is dismissing reports that Chancellor Gordon Brown plans to freeze fuel duty for a year from April 2001 as "pre-Budget report speculation".

It is widely thought Mr Brown may announce a freeze on fuel taxes in his pre-Budget statement on Wednesday in a bid to dampen anger over soaring petrol costs.

But official Treasury sources have refused to discuss what plans the chancellor might have ahead of his announcement in the House of Commons.

Mr Brown is due to speak at the CBI conference in Birmingham on Monday and is expected to reiterate the government's view that a significant cut in fuel tax would push up interest rates.

Plea to protesters

On the eve of the CBI conference, the organisation's director-general, Digby Jones, said the country could afford a 1.5bn cut, without putting the stability of the economy at risk.

Digby Jones
Digby Jones: "Don't return to blockades"
But Mr Jones also said the country "cannot afford" a repeat of September's fuel protests and urged protesters not to take further direct action.

It is believed Mr Brown could seek to use a tax freeze, coupled with cuts in vehicle excise duty and new levies on foreign trucks, to take the sting out of the anger which led to the oil refinery blockades.

Hauliers and farmers have threatened to renew their protests from 13 November if Mr Brown does not deliver a significant cut in fuel duty on Wednesday.

But Mr Brown and Prime Minister Tony Blair, who met on Sunday to put the final touches to the pre-Budget statement, have made it clear over the past week price cuts at the pumps are not being considered.

Mr Blair has warned that digging into the treasury surplus to cut the price of petrol risked throwing the UK into recession.

And Deputy Prime Minister John Prescott said the government would not be intimidated by the threat of renewed fuel protests.

"Governments will govern. They talk and discuss with people, but at the end of the day, we have to make a balanced decision for resources between either flood defences, pensions, health, education."

Mr Prescott also pointed out that the government was accountable to the electorate.

"That is not the case with the protesters, who are not so accountable."

The Conservatives have predicted Mr Brown's pre-Budget report would include concessions to hauliers and farmers.

Concession hint

Shadow Environment, Transport and Regions Secretary Archie Norman said: "What worries me is that the interest groups may win when the chancellor responds on Wednesday - and he will throw some money around.

"But it will be the ordinary working person, the ordinary farmer, the pensioner, the people who have to drive their car to get their children to school or get to work who get nothing out of it."

But in a BBC interview Mr Blair said he was not prepared to make cuts in fuel tax at the expense of the rest of the economy.

'Economic rationale'

"We could, of course, cut more off the fuel duty if we reversed the extra investment we have announced on schools, hospitals, transport and the police. Government is about choices."

"I could get rid of fuel duty altogether - never mind the 26p the protesters are asking for - if we had French levels of tax or business tax from Europe or VAT rates from Europe," said Mr Blair.

Tony Blair at the University of Northumbria in Newcastle
Blair: Economy would suffer

An independent survey, commissioned before the fuel crisis, found that motorists in seven countries, including France and Ireland, paid more tax than British drivers.

The survey added up petrol duty, car purchase taxes, car ownership taxes and road tolls to come up with a total figure.

Danish motorists came off worst with a total tax burden of 2,966 compared to 1,205 for UK drivers.

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See also:

04 Nov 00 | UK
Food blockade 'could kill'
03 Nov 00 | UK Politics
Fuel cuts 'would threaten stability'
02 Nov 00 | Pre budget report
Blair's fuel tax options
02 Nov 00 | Pre budget report
Brown's balancing act
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