Mixed messages. Fuel duty stabiliser debate12 Jan 2011

Prime Minister sends out mixed messages on fuel duty stabiliser

The Prime Minister has again said the Treasury is looking at how it might implement a fuel duty stabiliser to help motorists avoid the pain of record petrol and diesel prices.

At Prime Minister’s Question Tme he said: “On the fair fuel stabiliser, yes the Treasury are looking at this because clearly there is a case for saying that as the oil price rises, if it can be shown the Treasury benefits from extra revenue, there should be a way of sharing that with the motorist who is suffering from high prices.”

Just three days ago he said he, “…didn’t want to raise people’s hopes too far.”

David Cameron’s comments come as the price of fuel hit another record high at the pumps. According to figures from the Department of Energy and Climate Change unleaded is now 127.4p per litre while diesel is 131.6p per litre.

Professor Stephen Glaister, director of the RAC Foundation, said: “Talk of a complex fuel duty stabiliser is a bit of a red herring. Who for example, would set the price at which fuel was stabilised? If the government wanted to help drivers and hauliers, the quickest and easiest thing for them to do would be to cut fuel duty, or at least abandon April’s planned increase. The relentless rise in prices at the pump will inevitably put firms out of business and mean motorists driving less, both of which could lead to the perverse situation where overall revenue for the Exchequer drops. Ministers are on the verge of killing the goose which lays the golden egg.”