Fuel duty freeze26 Jun 2012

Chancellor backtracks on planned tax rise

The Chancellor has announced in the House of Commons that he is scrapping the 3p rise in fuel duty scheduled for 1 August. It will now take place in January 2013.

Commenting on the news, Professor Stephen Glaister, Director of the RAC Foundation, said:

“This is good news for drivers and good news for the country. Given that tax makes up around 60% of the pump price falls in the price of oil where only ever going to go so far in easing the financial burden on motorists.

“Road transport powers the nation’s economy and it is welcome that the Chancellor recognises the huge pressures the country’s 35 million drivers are under with transport being the biggest single area of household expenditure bar none.”

The Chancellor says the move will be funded by efficiency savings across Whitehall and will cost the Treasury a one-off £500 million.

Once VAT is taken into account, a person with an average car will save about £1.80 each time they fill the 50-litre tank.



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The full text of the Treasury press release is as follows:

26 June 2012
Chancellor announces support for motorists

The Chancellor has today confirmed that the Government will delay the fuel duty rise scheduled for 1 August until 1 January 2013.

The decision means that pump prices will be 10 pence a litre cheaper than if the Government had not abolished the pre-existing fuel duty escalator. As a result of repeated action to support motorists, fuel duty will not have increased for two successive years and the average family with a car will be £159 better off overall than they otherwise would have been. Hauliers will on average by £4,900 better off.

The Chancellor of the Exchequer said:

“This Government has done more to support to motorists than any other. We cut fuel duty last year, and avoided two year’s worth of rises planned by the previous Government. This comes on top of freezing council tax and putting money back in millions of taxpayers’ pockets through raising the personal allowance.

“Today’s decision is the right action to help, families, businesses and the broader economy.”

Chief Secretary to the Treasury Danny Alexander said:

“This is good news for motorists, families and business. Coming on top of previous reductions it will provide a welcome boost at a time when people are under real financial pressure.”

The cost of today’s action on fuel duty will be met in a fiscally neutral way, from reduced expenditure through savings in Departmental spending. More details will be announced by the Chancellor at the Autumn Statement.
Notes for editors

1. Fuel duty was scheduled to rise by 3.02 pence per litre 1 August 2012; this rise will now be delayed until 1 January 2013.

2. This measure has a one-off cost of around £550m. This will be met in a fiscally neutrally way through greater than forecast savings in departmental spending, and details will be confirmed at the Autumn Statement.

3. As well as cutting fuel duty last year, and delaying planned rises, the Government abolished the existing fuel duty escalator and replaced it with a Fair fuel stabiliser, which will limit any fuel duty rises when the international oil price rises above £45 a barrel.