July 16, 2008

Chancellor Alastair Darling has conformed that the proposed increase in fuel duty is to be postponed again but refused to abandon it altogether despite growing calls from drivers and industry groups.

Darling said: "The global credit crunch and sharp rise in world oil prices have pushed up prices at the pump. Today's decision will help motorists and businesses get through what is a difficult time for everyone."  

The price of fuel has steadily risen over the past six months to the point that people are now changing their motoring and travel habits, which is undoubtedly what the government actually wants but it will never go on the record to say so.

Even so, the postponment is simply political posturing, appearing to give something back to struggling road users but actually just delaying the inevitable.

Motoring organisations have welcomed the measures but stated that more needs to be done. The RAC said: "It does not go far enough. We would like to see the chancellor not just postpone future rises but actually cut fuel duty."  While not putting the price of fuel up is obviously welcomed, it offers no respite from the current high prices that are blighting businesses and households alike.

Kate Gibbs, of the Road Haulage Association, said anything that helped the road haulage industry was "good news" although the postponement of the fuel duty rise represented "quite a small drop in the ocean".

Freight Transport Association’s Director of External Affairs, Geoff Dossetter adds, ‘The scrapping of the increase at a time of high world oil prices was inevitable.  However, at 50p per litre, UK diesel duty for commercial vehicles is twice the EU average of just 25p per litre.

‘The Government must now engage with the industry in order to find a practical means of bringing UK duty more in line with continental competitors.  Failure to do so will only result in higher costs for UK industry and higher prices for UK consumers.'  Something being felt with each trip to the shops.

The RAC Foundation have called for an urgent 'root and branch' review of motoring taxes, stating that The current system is failing motorists by charging them more and more for increasingly poor levels of service.

According to RAC figures the government currently takes four times more in taxes from motorists (£31.2bn), than it spends on the roads (£8.2bn).

The price of a litre of unleaded costing 115p includes 17.13p of VAT.  As that VAT is added

 after duty is included, 8.6p is the VAT applied to the duty added to the fuel, yes tax on tax.  So if the VAT applied to the duty was Just halved it would offer motorists 4.3p off per litre. 

With this announcement Alastair Darling has shown himself to be out of touch with the man on the street (previously the man on the road, but he cannot afford to run a car any more).  Motorists are fed up with being seen as a soft touch and filling in the holes that are appearing in the public purse.  Let's hope that today’s parliamentary debate on the cost of fuel will yield some results and help get Britain moving again.

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