Chancellor refuses tax cut
Anger from industry groups as Darling decides not to commit to slashing fuel duty
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A planned 2p increase on petrol and diesel could still go ahead in October after Chancellor Alistair Darling yesterday refused to commit to cutting fuel tax.
He said he would keep fuel duty “under review” throughout the rest of the year, but stopped short of saying he would drop plans for the rise.
Last night a senior haulage industry figure said October would be too late for many companies, saying spiralling diesel prices would put hauliers out of business.
Mr Darling said after a meeting with oil chiefs at Banchory’s Raemoir House Hotel: “I announced that I would postpone the April increase in the Budget.
“It’s due to come in October and I said I would come back to it before then and that remains the decision.”
The chancellor added: “One of the reasons that oil prices are so high at the moment is because of people’s expectations and that people can see that the demand for oil is now growing faster than the supply, principally because of what is happening in China and India.
“If people believe that there is more oil coming, literally in the pipeline, that will help take some of that pressure off.
“So I think the more that people can see that we are planning to take action to increase production of oil and gas, the better it is.”
Mr Darling said that, with other countries, the UK was taking the lead in trying to encourage more oil and gas production.
“Nobody is arguing that you can simply turn on a tap and the oil will flow through it. There are things that can be done, some things more quickly than others.
“What we need to do is make sure that we are bringing forward production in the medium term – in two years time, in three years time and so on.”
The chancellor ruled out Labour backing of an SNP amendment to the Finance Bill which will go before Westminster, asking for a fuel-duty regulator to be introduced to help motorists when the oil price is high.
“I just don’t think their sums add up,” he said.
“As an administration, they do not have the problem of having to raise money. I just think that it is not the right answer and I think it is far better to tackle the root cause of the problem, which is the global price of oil.”
The Road Haulage Association’s Phil Flanders said many hauliers could be out of work before October unless the UK Government took action now. He said: “The chancellor obviously does not care about the future of the haulage industry. If things don’t change, there won’t be as many people in a job by October. People are calling out for help now.”
The Freight Transport Association added that the imposition of the chancellor’s proposed October increase was “unthinkable”, saying that the tax should be cut by 25p a litre to bring the UK into line with the rest of Europe.
Scottish Fishermen’s Federation chief executive Bertie Armstrong said the industry faced a tough few years because of high fuel prices.
He added: “The UK Government’s attempts to increase North Sea production isn’t going to take the price of oil down for a long time, so for the short term we are going to remain in this gloomy position.”
