Fuel prices on the rise
Fuel prices are still set to rise significantly even though the Chancellor has not announced any increases in duty in the budget. This is because the hikes planned by the previous Labour government will still come into force. The increase in VAT will also raise forecourt costs.
Fuel duty is due to rise by 1p on October 1st and by 0.76p on January 1st 2011. On January 4th 2011 VAT will rise from 17.5% to 20%.
The Chancellor has asked the Office for Budget Responsibility to assess over the summer the effect of oil price fluctuations on the public finances. Based on this the Government will then look at options for a fair fuel stabiliser. The Government is also considering the case for introducing a fuel duty discount in remote rural areas, with possible pilot schemes to take place in Scotland.
Commenting on the Budget, Professor Stephen Glaister, director of the RAC Foundation said:
“Drivers know they must pay their fair share of taxes, but the emphasis is on fair and talk of a fuel stabiliser is to be welcomed. Whilst there will be some relief that fuel duty has not been hiked even further, the existing planned rises, plus the increase in VAT, means the cost of a tank of fuel for a car like a Ford Mondeo will have risen by about £3 by early next year – and that’s assuming the price of oil goes no higher”
“The Chancellor has pledged to keep investing in transport infrastructure and judge capital spending plans on the economic returns they deliver. This must be good news for the congested road network, and the 34 million drivers who use it, because highways schemes usually offer excellent rates of return.”