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| Version 2 | Version 3 |
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| Budget 2011: Osborne to watch fuel prices 'like a hawk' | Budget 2011: Osborne to watch fuel prices 'like a hawk' |
| (about 1 hour later) | |
| The windfall tax on oil companies announced in the Budget will not be passed on to motorists in higher fuel prices, George Osborne has said. | The windfall tax on oil companies announced in the Budget will not be passed on to motorists in higher fuel prices, George Osborne has said. |
| The chancellor announced a £2bn windfall tax on North Sea oil producers, to pay for a fuel duty cut. | The chancellor announced a £2bn windfall tax on North Sea oil producers, to pay for a fuel duty cut. |
| Labour said the oil firms might recoup this through higher pump prices. | Labour said the oil firms might recoup this through higher pump prices. |
| But Mr Osborne said ministers would be "watching like hawks" and would be wanting to "make sure" the tax rise was not passed on to motorists. | But Mr Osborne said ministers would be "watching like hawks" and would be wanting to "make sure" the tax rise was not passed on to motorists. |
| The chancellor was speaking during a tour of television and radio stations as the political battle over Wednesday's Budget got under way in earnest. | The chancellor was speaking during a tour of television and radio stations as the political battle over Wednesday's Budget got under way in earnest. |
| Shadow chancellor Ed Balls, putting the Labour view, told BBC News the VAT rise in January had already put fuel prices up. | |
| Cutting fuel duty was the "right decision" but might not lead to cheaper petrol for motorists because the oil companies could increase prices, he said. | |
| "Can George Osborne guarantee they won't just push that straight back up at the pumps? No he can not. What he should have done is cut VAT on petrol and he didn't." | |
| In the Budget Mr Osborne said the price of oil had risen 35% in five months and oil companies were making unexpected profits. | |
| He said he would introduce what he described as a "fair fuel stabiliser", increasing the supplementary charge on oil and gas production to raise an extra £2bn ($3.3bn). | |
| Mr Osborne said if the oil price fell the fuel duty escalator - which increased fuel tax above inflation - would be reintroduced and the new oil tax would fall. He told the BBC that was the "right thing to do to try to preserve investment and jobs in that industry if the oil price were to fall." | |
| It follows a recent surge in global oil prices. | |
| Danny Alexander, the Chief Secretary to the Treasury, said the suggestion the oil tax would be passed on to motorists was "complete nonsense" because the North Sea oil companies were separate from those selling fuel at the pumps, who have access to a competitive global oil market. | |
| He went on: "If the oil companies try to pass that on to retailers they will simply buy their fuel from elsewhere. You've got a global market for oil and you've got a competitive market for the supply of fuel, so there is no prospect of that being passed on." | He went on: "If the oil companies try to pass that on to retailers they will simply buy their fuel from elsewhere. You've got a global market for oil and you've got a competitive market for the supply of fuel, so there is no prospect of that being passed on." |
| The chancellor's windfall tax plans were given a cool reception by the petrochemicals industry. | The chancellor's windfall tax plans were given a cool reception by the petrochemicals industry. |
| "This tax hike could have a chilling impact on future investment in the North Sea," said Mark Hanafin, managing director of Centrica Energy. | "This tax hike could have a chilling impact on future investment in the North Sea," said Mark Hanafin, managing director of Centrica Energy. |
| "With more than 50% of Britain's gas now imported, it is vital for our energy security and for the economy that investment is maintained to ensure we extract all of the untapped hydrocarbons we can." | "With more than 50% of Britain's gas now imported, it is vital for our energy security and for the economy that investment is maintained to ensure we extract all of the untapped hydrocarbons we can." |
| Malcolm Webb, chief executive of Oil and Gas UK, said it would have a "depressant effect" on the industry but denied that companies would pass on the increase. He told the BBC: "Oil is an internationally traded commodity. This is a direct squeeze on the incomes of the oil companies. It won't affect the consumer at the pump at all." | |
| Defending his Budget - which also saw economic growth forecasts downgraded - in a round of interviews on Thursday morning, Mr Osborne said he would have liked growth to be stronger but Britain was "coming out of the deepest recession in your lifetime, or mine... the biggest banking crisis in our history" and he had created stability and an "entrepreneurial boost" to get Britain back to prosperity. | |
| 'Join the dots' | |
| Unemployment was forecast to fall, employment set to grow by 1m over the Parliament and there were predictions growth would be "stronger than the European average", he said. | |
| He also pointed to international events - like military action in Libya and the sovereign debt crisis in Portugal - and said they were all connected to the economy. | |
| "I think people should join the dots... I'm trying to steer a course between rising prices around the world, driven largely by oil and the European situation where the markets are looking at countries that cannot pay their way in the world and Britain has a larger budget deficit than any of those countries you are talking about." | |
| He said there had been a positive business response to his statement - and pointed to comments by Sir Martin Sorrell, head of advertising giant WPP, who said he may recommend that his company move its tax headquarters back to the UK from the Irish Republic, following the Budget. | |
| Shadow chancellor Ed Balls has blamed rising VAT for high pump prices. | Shadow chancellor Ed Balls has blamed rising VAT for high pump prices. |
| "The idea that drivers around the country should be grateful for a 1p cut in fuel duty when George Osborne's VAT rise is adding 3p to the price of petrol is laughable," Mr Balls said. | "The idea that drivers around the country should be grateful for a 1p cut in fuel duty when George Osborne's VAT rise is adding 3p to the price of petrol is laughable," Mr Balls said. |
| "George Osborne is, in a blinkered way, carrying on regardless of what people know is the reality which is that he took an economy which was recovering, unemployment was coming down and he decided instead to dramatically change course to try to get rid of the deficit entirely in one parliament. | "George Osborne is, in a blinkered way, carrying on regardless of what people know is the reality which is that he took an economy which was recovering, unemployment was coming down and he decided instead to dramatically change course to try to get rid of the deficit entirely in one parliament. |
| "The biggest cuts in public spending and deficit reduction of any major economy in the world and the reality is that it's not working," he said. | "The biggest cuts in public spending and deficit reduction of any major economy in the world and the reality is that it's not working," he said. |