Fuel duty increase postponed

The Treasury has announced that a planned 2p per litre rise in fuel duty, due to come into force on 1 October 2008, has been postponed.

As a result of this decision, main road fuel duty rates will remain at 50.35 pence per litre after 1 October this year. The 2p increase had originally been set for April but was deferred until October. Now the Treasury has said that the rise is to be put back a further six months.

Main road fuel duty rates will remain at 50.35 pence per litre after 1 October this year. Planned increases in road fuel gases, biofuel duty rates and rebated oils rates will also be postponed.

Announcing the postponement, the Chancellor, Alistair Darling said: “The global credit crunch and sharp rises in world oil prices have pushed up prices at the pump. The decision will help motorists and businesses get through what is a difficult time for everyone.”

This measure is taken in response to sharp rises in world commodity prices, with the price of oil almost doubling over the past year to reach a real-terms record high of $146 a barrel recently. This has inevitably had significant knock-on effects on the price of road fuels, which the Government is committed to taking into account when considering decisions on fuel duties.

Postponing the planned increase in fuel duty is also consistent with the Government's commitment to support the Bank of England in maintaining low inflation. Future rate decisions are a matter for the Budget.

The Treasury estimated that delaying the fuel duty increase will cost the public purse some £600 million in income.

Article Added Friday, 18 July 2008

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