Page last updated at 17:19 GMT, Wednesday, 16 July 2008 18:19 UK

Brown defends fuel duty decision

Petrol pump
The rise in fuel duty has led to protests in recent weeks

Gordon Brown has defended a decision to postpone a 2p rise in fuel duty after David Cameron suggested it was timed to coincide with next week's by-election.

The increase has been put off from October until at least next March.

In the Commons, the Tory leader asked if this had "anything to do with the Glasgow East by-election".

But the prime minister said the move, coming just before MPs' summer break and amid rising oil prices, would help people facing high food and fuel bills.

Pressure

The increase in fuel duty - originally planned for last March - had already been postponed until this October.

But the government says it will now not make any changes until the Budget next March at the earliest.

The price of unleaded petrol has risen 25% over the past year and pressure has been mounting for duty to be cut.

Can you tell us whether this decision had anything to do with the Glasgow East by-election?
David Cameron
Tory leader

The announcement of a further delay to the planned rise was made by Chancellor Alistair Darling ahead of a Conservative-called debate on fuel duty now taking place in the Commons.

At prime minister's question time, Mr Cameron said: "The government announced today that after months of dithering it is scrapping the 2p tax rise on fuel.

"Can you tell us whether this decision had anything to do with the Glasgow East by-election?"

Mr Brown replied: "It is right to announce, as we have done previously, a decision before the House rises (for the summer break)."

He said the government would "continue to help hard-pressed families who are facing high fuel bills and high food prices because of what is happening in every country in the world....

"And in recognition of the problems that people face with petrol, we are freezing the duty of petrol for the full year. And we will bring forward further measures to help families in due course."

'Winter of discontent'

The prime minister's spokesman said there were "lots of precedents" for announcements on fuel duty to be made before the parliamentary summer recess.

He said Mr Darling had "decided to do it now because he wanted to end any uncertainty".

Mr Brown said he was working to overcome a difficult economic situation

But Liberal Democrat leader Nick Clegg warned a "winter of discontent" was "just around the corner" with jobs at risk and families coping with rising food and energy prices.

"You promised to abolish boom and bust. But now we've got both - inflation's booming, the economy's bust," he told the prime minister.

Mr Brown said employment was at its "highest level ever" according to labour force statistics published on Wednesday and inflation was lower than the rest of Europe and the US.

"We are taking action to help people through these difficult circumstances," he said and urged Mr Clegg to "see the economy in its proper context".

This is good news but it does not go anywhere near giving the UK road haulage industry a level playing field to compete with foreign truckers
Peter Carroll, haulier and fuel protester

But Lib Dem Treasury spokesman Vincent Cable said: "There's absolutely no reason why the chancellor should have been stampeded into making this decision and we have no indication how it's going to be paid for."

The Institute for Fiscal Studies estimates the latest fuel duty decision leaves the Exchequer £550m worse off, and brings the total cost of freezing it this year to £1.1bn.

The decision to postpone the rise was disclosed in a response to a parliamentary question tabled by a Labour backbencher.

Budget consideration

Mr Darling told the BBC News Channel it was clear that oil prices were going to remain "high for some time yet"

"So I've reached the view that it's right now, before the House of Commons goes away for the summer recess, to say that we're going to postpone the increase that was due in October," he said.

Chancellor Alistair Darling explains the fuel tax rethink

"I'll look again at the matter again in the budget but I think that this is the right thing to do to help motorists and to help businesses."

The decision follows a series of demonstrations by lorry drivers demanding cheaper diesel. Figures show petrol prices have risen nearly a quarter during the past year, and diesel 36%.

AA figures suggest the cost of a litre of unleaded petrol averaged 119.5p across the UK on Tuesday, with diesel averaging out at 133p.

Fuel duty increases have been postponed a number of times over recent years when oil prices have been high.


Readers have been writing to the BBC News website with their reaction to the fuel duty postponement:

I fail to see how this helps people out. The chancellor is only postponing a rise in duty. Not cutting duty. So essentially they've done nothing for us. And Vince Cable wonders where the shortfall of £1.1bn will be made up? How about the windfall tax the chancellor has collected due to rising oil prices?!
Col, Milton Keynes

I think it's obviously a good thing, but fuel duty needs massive cuts, to bring the price of unleaded and diesel to around the 80p a litre mark. That would be a reasonable amount to pay.
Sam Middleton, Yarm, Teesside

Far too little, far too late.
Paul, Ashford, Kent

What David Cameron should be asking, is why a cut to the tax should not be imminent. Postponing a rise is laughably weak. With the recent increases in oil prices has come a proportionate rise in the income from fuel duty. A huge extra windfall for the Treasury at our expense. Cutting the tax rate to maintain the Treasury's income and offset the effect on the taxpayer would be the response of a government with an interest in the welfare of the British people. The opposition should be making this point very clearly.
Michael, London

Inevitable. But why is there so little mention of the EXTRA revenue as a result of fuel duty being a percentage of fuel cost - so the higher the cost of petrol, the more duty is paid?
Pat Bell, Worksop, Notts

The extra revenue from the planned fuel duty escalator rise is built into the Chancellor's spending plans. But at what oil price was the expected extra revenue calculated? It's a safe bet that it wasn't at $140 a barrel or more. Therefore, how much "bonus" extra VAT revenue is he raking in from us at the pumps due to the high price of oil? I'm sure that it's a lot more than 2p/litre, meaning he'll have more money in the pot than he would have got from the proposed duty rise. In which case, shouldn't he be able to really help us by CUTTING duty and still balance his books?
Anthony Dixon, Lincoln

So we are now supposed to feel over the moon and that the government is really fighting for us because it chose to postpone a further tax increase. Do you honestly think the public are that stupid Mr Brown?
Steve, Wellingborough

Of course this is timed to coincide nicely with the by-election. Is there anything that Brown and his cronies do that isn't 100% politically motivated? If there is, I have yet to see it.
Kier, Reading

How about a reduction and get back to 86p a litre like year ago.
Pete Graham, Birmingham

Well it's a start but so much more needs to be done to help the hard working people who need their car as the only reasonable means of transport to work.
Caroline, County Durham

It had to happen! Why did it take so long for the government to announce. Britain is the highest priced for fuel in Europe, at a time when the Government are reaping the benefit of high fuel costs with their own windfall through their high taxation. 67 pence (including VAT) in the pound goes to the government coffers, it's disgusting the way the government are letting the normal person in the street suffer through their taxation.
Peter Davis, Inverness, Scotland

Everyone is forgetting that each time the price of fuel at the pump goes up, the government gets 17.5% VAT on the increase. The 2p per litre increase which has been postponed will not cost the Chancellor anything, he's still gaining. If the oil price drops he will lose out on the VAT. Every time it goes up he gains. Why are we so blind?
John Bowtell, Ipswich

I have been firmly of the opinion that the government would be in a position to give ground on duty once the crude oil price inflation tax windfall started to bite into the budget deficit. Is this the first tangible proof that this is happening?
Thomas Wedd, West Linton, Scotland

At a time when people are having to cope with the increased cost of living this decision should be welcomed. My only complaint is that why is fuel duty not being reduced as rising food prices are directly linked to the price of fuel?
Mr A R Gandhi, Wembley

I think it is too little. A drop in fuel costs is only going to help lower costs all round, which has to be good for the economy! Cheaper transport is going to give us cheaper goods and help get the country running again.
Roy, Essex

Fuel has gone up between 25% and 36% in the last year and the PM is offering to "postpone" another 2p rise - Wow! Thanks! Can I have jam on it? Why doesn't he instead levy a windfall tax on Shell and BP of say somewhere between 25% and 36% of their profits this year and give us all a tax cut?
Hugh Janus, London

Big deal, it still won't stop garages profiteering by hiking up the price three times a week. The tax needs reducing not delaying. Most people now are running round with cars full with petrol, and just keep topping it up. It is not only dangerous in hot weather but also catastrophic in the event of a smash.
Steve Devine, Derby England

This announcement has been made to make the government appear generous, but in reality they have had that 2p rise several times over in the past year. Every 13.5p rise in fuel to the consumer contains 2p in extra VAT revenue!
Richard, Yeovil, Somerset




SEE ALSO
The full story: PM's questions
16 Jul 08 |  UK Politics
Tories propose fuel duty changes
06 Jul 08 |  UK Politics
Call for review of motoring taxes
04 Jul 08 |  Business

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