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Rise In Petrol Prices

Scheduled Fuel Duty Rise Dropped

Motorists in the UK and especially remote parts of Scotland have been hit hard by the continuous rise in fuel duty. Good news is that the government is not going ahead with the scheduled 1p fuel duty rise, in the face of protest at the escalating price of petrol and the uncertainty in the Middle East.

Labour announced the duty increase in its final budget, but the rise in oil prices is making its implementation in the forthcoming budget later this month politically impossible for the Conservatives. Ministers have been given some room for manoeuvre by a higher than expected tax take and by Job Seekers Allowance claims that are lower than forecast. The Treasury is also becoming increasingly supportive of a fuel duty stabiliser as a way of smoothing out the impact of sudden jumps in petrol prices. Support for the stabiliser has come from the Scottish Nationalists although Treasury ministers are still wrestling with the practicalities.

The proposal is that, as global oil prices increase, the tax take is reduced, and, as global prices drop, the tax take is increased. However, to prevent this process becoming a blank cheque for either the Treasury or, indeed, the motorist, caps would be needed.

At prime minister’s questions David Cameron said: ” I know how difficult it is for motorists, and particularly for small businesses and families, when they are filling up at the pumps and paying more than £1.30 a litre.”

“As we have said, we will look at the fact that extra revenue comes to the Treasury when there is a higher oil price, and see if we can share some of the benefit of that with the motorist. That is something that Labour never did in all its time in government.”

In a sign of the sensitivity of the issue, the Fair Fuel UK duty campaign (which has backing from, among others, the Daily Mirror, the RAC and the Freight Transport Association) has delivered to Number 10 a petition of 120,000 signatures gathered in five weeks. The average price per litre has reached 130.03p for unleaded petrol and 135.44p for diesel, a record high. Anticipating a move by the Treasury in the budget, shadow chancellor Ed Balls called at the weekend on the government to give up the recent VAT increase on petrol as prices get closer to £1.40 a litre. He said this would save around 3p a litre on prices and help millions of people struggling with the rising cost of living. Fuel duty was raised on 1 January to 59.85p a litre, and average UK petrol and diesel prices rose more than 2p a litre following the VAT increase to 20% on 4 January.

Tax now accounts for 63% of the pump price. A further rise of 2p would see a gallon costing an average of £6.

Chris Huhne, the energy secretary, is expected to soon join the debate on the rise in oil prices, arguing it reinforces the government’s case for a green revolution. He has commissioned fresh research into the impact of spiralling oil prices into growth.Figures published by the then business department in 2008 suggested that a 30 % rise in oil prices would over a six-year period lead to “real private consumption falls by an average of 0.9% from the baseline level, reflecting primarily a decrease in real disposable income from reduced real wage compensation. Real wage rate were shown to fall by 0.6% on average and employment declines by 0.4% from the baseline”.

Tuff Van Hire have some great tips on driving your van in the most economical and safe way to give you most out of hiring a van from Tuff Van Hire.

Copyright 2011.

Posted on by tuff

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