Scots drivers get fuel cut boost 23 | 03 | 2011
SCOTS DRIVERS will benefit from a 1p per litre drop in fuel prices as from 6pm this evening after Chancellor George Osbourne announced a raft of measures aimed at saving money for motorists in today's annual Budget.
In addition to the 1p/litre drop on fuel prices, Osbourne has scrapped Labour's fuel duty escalator for the rest of this parliament in favour of a new 'fair fuel stabilsier'.
The result of the latter announcement is significant. Had the duty on fuel risen by inflation, plus 1p, from April 1 — as Labour had intended — it would have added around 5p in cost to each litre of fuel.
But the introduction of the fair fuel stabiliser will see increases on oil and gas production profits from 2% to 32% to fund cuts in fuel duty, expected to raise £2 billion. Labour's fuel duty escalator would have seen seven incremental increases in fuel duty; next week's rise would have been the third.
Osbourne also rejected proposals by Labour to cut VAT on fuel. After looking into the proposals in detail, he said they would take six years to introduce as they were "illegal". Should there be a dramatic drop in the cost of a barrel of oil to consistently below $75 per barrel — it is currently at $105 per barrel — the escalator could be re-introduced.
No one should underestimate the damage Labour's handling of fuel duty has caused to motorists across Scotland, and especially those in rural areas, the Highlands and the islands.
The final fuel duty rise from Alastair’s Darling’s last Labour budget came into effect on January 1 this year, causing fuel duty to rise by 0.76p per litre to just under 59p per litre. Combined with the rise in VAT to 20% from the first coalition budget, which appeared on January 4, this added around 4p to each litre of fuel, raising the cost of filling an average family car (50-litre tank) by £2.
Today Chancellor Osbourne said the overall cost of filling a family car such as a Ford Focus had gone up £10 in six months. It had become a "huge burden on families and small businesses".
And Osbourne announced a raft of additional measures which are aimed at heaping the motorist. There's a freeze on vehicle excise duty, an increase in approved mileage rate allowance from 40p to 45p (the first rise since 2002) and an extra £100m to help repair potholes on Britain's roads, the same amount as given to councils last year by Labour.
Car tax bands will also be eventually changed as part of the "green energy revolution", although Osbourne didn't go into details on the scheme.
BUDGET HIGHLIGHTS TO HELP THE MOTORIST
• Fuel duty cut by 1p per litre from 6pm today.
• Planned 4p per litre rise due in April to be delayed to 2012.
• Petrol price escalator cancelled when oil price is high.
• Business mileage allowance increased from 40p to 45p.
• VAT on fuel will not be reduced
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Jim McGill