Osborne postpones 3p fuel duty rise due in August

Chancellor George Osborne has announced the 3p rise in fuel duty, planned for August, will not go ahead this year.

As he took departmental questions on 26 June 2012, Mr Osborne said fuel duty would now be 10p a litre lower than it would have been had the coalition stuck to Labour's plans.

"We are on the side of working families and businesses and this will fuel our recovery at this very difficult economic time for the world", Mr Osborne said.

The government told MPs last autumn that the rise this summer would go ahead, but would be reduced from 5p to 3p.

Shadow chancellor Ed Balls, who had called for the rise to be scrapped in an article for the Sun newspaper, described the move as a U-turn, but said he welcomed it.

He wrote: "The government should be giving our economy a boost - not clobbering families, businesses and pensioners just at the wrong time. That's why Labour is calling on the chancellor to stop August's fuel duty rise - at least until next January."

Mr Balls drew MPs' attention to previous U-turns on changes to the rules governing tax relief on charitable giving, and imposing VAT on static caravan sales and hot takeaway food.

"Now he's on a roll," Mr Balls said, "will he now also do a U-turn on the millionaire's tax cut and rescind the granny-tax rise?"