Page last updated at 14:54 GMT, Thursday, 3 July 2008 15:54 UK

Brown hints at fuel duty freeze

Petrol pump
The rise in fuel duty was delayed in the Budget

Gordon Brown has said the delayed 2p rise in fuel duty was something that will be looked at "very, very carefully" over the next few weeks.

He refused to say it would not go ahead but told MPs: "I think you will find that in most years since 2000 that the duty has actually been frozen."

There has been speculation that the government is to shelve the rise in this autumn's Pre-Budget Report.

Chancellor Alistair Darling also said he was "very focused" on fuel duty.

On Wednesday, lorry drivers held a second demonstration in London demanding cheaper diesel.

And on Thursday the price of Brent crude oil hit a record high of $146 (74) a barrel for the first time in London - an increase of almost $4 (2) since the beginning of the week.

Oil prices

The 2p rise in fuel duty, which had been due to be introduced in the Budget, was delayed for six months because of soaring crude oil prices.

Mr Brown was repeatedly quizzed about whether that rise would go ahead, during a meeting with the chairmen of 30 Commons committees.

I'm not going to make a forecast but it's clearly a matter that will be looked at very, very closely over the next few years
Gordon Brown

He said it was a matter for the chancellor and it was right he had time to review it. But Labour's transport chairman Louise Ellman suggested it was unlikely Mr Brown would not have a say in the decision.

Mr Brown said the chancellor would take account of factors like the prices of diesel and petrol and their impact on the economy as a whole.

"I'm not going to make a forecast but it's clearly a matter that will be looked at very, very closely over the next few weeks."

He added: "You have got be conscious of what's happening to the oil price itself, what then is the effect on the cost of diesel and petrol and the impact that that is going to have on the economy as a whole.

"And I think you'll find that in most years since 2000 that the duty has actually been frozen."

'Very focused'

Meanwhile, asked about planned vehicle excise duty changes, Chancellor Alistair Darling has told the Evening Standard: "I think the bigger question for motorists, frankly, is the fuel duty... that's something you pay every week, not once a year, and that is something that we in government are very focused upon."

But Tim Yeo, the Conservative chairman of the Commons environment audit committee, asked why Mr Brown had not increased fuel tax when the economy was stronger and oil prices lower and understanding about climate change was growing.

"Was it a sensible policy to reduce the level of tax in real terms?" he said.

Was it a sensible policy to reduce the level of tax in real terms?
Tim Yeo
Environmental audit committee

It suggested that if Mr Brown was "afraid" to increase tax during the good times, there was "no chance at all" he would use fuel tax to influence people's choice of car during a more difficult economic period, added Mr Yeo.

Mr Brown said people were not looking at the tax rate on fuel, but the overall price of fuel and high oil prices would have an effect on demand.

He also said the government had led the way on other issues, from the climate change levy and emissions trading to trying to set up a carbon market in Britain.

Mr Brown said climate change was "one of the great challenges of our time" and Britain had to reduce its reliance on fuel supplies.

Councils' plea

Speaking to BBC Radio 4's World at One programme later, shadow chancellor George Osborne said it would be "very surprising" now if the government pressed ahead with the 2p rise - as previous "less significant" rises in fuel prices had prompted them to freeze it.

He also criticised a situation "where you find the chancellor or prime minister having to hint at abandoning tax changes they announced a few months earlier."

Mr Darling also dismissed calls for councils to be exempted from fuel duty, after the Local Government Association warned services could be cut to cover the increased cost of running rubbish trucks, gritters and other vehicles.

This has risen from 541m to 780m over the past two years, the association said.

But the chancellor said: "Many people have got obligations in both the public and private sector, and I think to do something for councils on their own would be hard to justify.

"As far as local authorities are concerned, the amount of money that we have given them over the last few years has been increasing and, like everyone, they have got to anticipate the bills that they might face and they have got to deal with them."




SEE ALSO
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London oil price hits $146 record
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Brown quizzed: Point-by-point
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