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Government postpones planned 3p fuel duty increase | Government postpones planned 3p fuel duty increase |
(about 17 hours later) | |
The government has announced it will postpone its 3p-a-litre rise in fuel duty in August until January next year. | The government has announced it will postpone its 3p-a-litre rise in fuel duty in August until January next year. |
The move follows a campaign by some road users' groups, who argued the increase would damage the economy. | |
Fuel duty will be frozen for the rest of the year, Chancellor George Osborne told MPs, adding that this would benefit families and businesses. | Fuel duty will be frozen for the rest of the year, Chancellor George Osborne told MPs, adding that this would benefit families and businesses. |
Labour, the SNP, Plaid Cymru and MPs from other parties had threatened to force a Commons vote on the issue. | Labour, the SNP, Plaid Cymru and MPs from other parties had threatened to force a Commons vote on the issue. |
The Sun newspaper and several Conservative MPs have also been pushing for a change of heart, amid concerns that prices at the pumps are squeezing living standards. | The Sun newspaper and several Conservative MPs have also been pushing for a change of heart, amid concerns that prices at the pumps are squeezing living standards. |
Announcing the postponement of the duty rise, Mr Osborne said: "We are on the side of working families and businesses and this will fuel our recovery at this very difficult economic time for the world." | Announcing the postponement of the duty rise, Mr Osborne said: "We are on the side of working families and businesses and this will fuel our recovery at this very difficult economic time for the world." |
'Difficult decisions' | 'Difficult decisions' |
The government was "doing everything we can", he told the Commons, adding: "The one-off cost of this change will be fully paid for by the larger-than-forecast savings in departmental budgets." | The government was "doing everything we can", he told the Commons, adding: "The one-off cost of this change will be fully paid for by the larger-than-forecast savings in departmental budgets." |
In last year's Autumn Statement Mr Osborne cancelled a scheduled 3p rise in fuel duty for January this year but said another planned rise this August would proceed - although it would be cut from 5p to 3p. | In last year's Autumn Statement Mr Osborne cancelled a scheduled 3p rise in fuel duty for January this year but said another planned rise this August would proceed - although it would be cut from 5p to 3p. |
A Downing Street spokesman said the issue had not been discussed at Tuesday's cabinet meeting, adding that it had been "under consideration" for some time. | A Downing Street spokesman said the issue had not been discussed at Tuesday's cabinet meeting, adding that it had been "under consideration" for some time. |
Labour has called for the increase to be delayed until next January, saying the cost - between £500m and £600m - could be covered by the underspend on the Olympics budget or by closing tax loopholes and reversing changes to tax allowances for pension contributions for those earning more than £150,000. | Labour has called for the increase to be delayed until next January, saying the cost - between £500m and £600m - could be covered by the underspend on the Olympics budget or by closing tax loopholes and reversing changes to tax allowances for pension contributions for those earning more than £150,000. |
In the Commons, Mr Balls told the Commons that Mr Osborne was a "part-time, U-turning chancellor" who would "not assume responsibility for his own decisions". | In the Commons, Mr Balls told the Commons that Mr Osborne was a "part-time, U-turning chancellor" who would "not assume responsibility for his own decisions". |
But Mr Osborne said road users would be paying 10p a litre more in taxation had Labour still been in power. | But Mr Osborne said road users would be paying 10p a litre more in taxation had Labour still been in power. |
SNP Treasury spokesperson Stewart Hosie MP said: "This is a great result... the chancellor's cave-in comes on the day that our Budget clause, supported by 54 MPs from across nine parties, was due to be tabled ahead of the Finance debates next week." | SNP Treasury spokesperson Stewart Hosie MP said: "This is a great result... the chancellor's cave-in comes on the day that our Budget clause, supported by 54 MPs from across nine parties, was due to be tabled ahead of the Finance debates next week." |
Plaid Cymru's Westminster leader, Elfyn Llywd, said: "This latest in a string of government U-turns will offer people some relief as they struggle to make ends meet - at least until the end of the year as the chancellor has noted... | Plaid Cymru's Westminster leader, Elfyn Llywd, said: "This latest in a string of government U-turns will offer people some relief as they struggle to make ends meet - at least until the end of the year as the chancellor has noted... |
"Plaid Cymru alongside the SNP have been calling for a genuine fuel duty stabiliser for nearly a decade and that is yet to be achieved, but at least this further damage has been avoided." | "Plaid Cymru alongside the SNP have been calling for a genuine fuel duty stabiliser for nearly a decade and that is yet to be achieved, but at least this further damage has been avoided." |
'Sigh of relief' | 'Sigh of relief' |
RAC Foundation director Professor Stephen Glaister said: "This is good news for drivers and good news for the country. Given that tax makes up around 60% of the pump price, falls in the price of oil were only ever going to go so far in easing the financial burden on motorists." | RAC Foundation director Professor Stephen Glaister said: "This is good news for drivers and good news for the country. Given that tax makes up around 60% of the pump price, falls in the price of oil were only ever going to go so far in easing the financial burden on motorists." |
Quentin Wilson, national spokesman for FairFuelUK, said: "This is democracy at its very best where a government and a chancellor can review decisions, and act with fairness and common sense. Businesses and hard-working families across this country will breathe a grateful sigh of relief, at least for the rest of this year." | Quentin Wilson, national spokesman for FairFuelUK, said: "This is democracy at its very best where a government and a chancellor can review decisions, and act with fairness and common sense. Businesses and hard-working families across this country will breathe a grateful sigh of relief, at least for the rest of this year." |
Friends of the Earth's head of campaigns, Andrew Pendleton, said: "The main reason for high pump prices is the cost of oil, which is predicted to rise in the long-term. | Friends of the Earth's head of campaigns, Andrew Pendleton, said: "The main reason for high pump prices is the cost of oil, which is predicted to rise in the long-term. |
"Motorists up and down the country will continue to pay a heavy price if ministers and motor manufacturers don't take urgent action to wean our cars off their oil dependency. | "Motorists up and down the country will continue to pay a heavy price if ministers and motor manufacturers don't take urgent action to wean our cars off their oil dependency. |
"Ministers must help fast-track the production of electric vehicles and super-efficient cars that burn less fuel - and provide decent alternatives to driving, such as better public transport and safer cycling." | "Ministers must help fast-track the production of electric vehicles and super-efficient cars that burn less fuel - and provide decent alternatives to driving, such as better public transport and safer cycling." |
Last week Prime Minister David Cameron said the planned duty rise would be "looked at", but held out little hope for a delay, saying: "I think people sitting at home know that the government doesn't have a bottomless pit of money." | Last week Prime Minister David Cameron said the planned duty rise would be "looked at", but held out little hope for a delay, saying: "I think people sitting at home know that the government doesn't have a bottomless pit of money." |
BBC political correspondent Gary O'Donoghue said some Tory MPs were furious that they had been told to defend the government's decision not to delay the fuel rise until a few hours before it was reversed. | BBC political correspondent Gary O'Donoghue said some Tory MPs were furious that they had been told to defend the government's decision not to delay the fuel rise until a few hours before it was reversed. |
"It was absolutely bloody stupid, treating us like idiots," one said. | "It was absolutely bloody stupid, treating us like idiots," one said. |
The cancellation of the duty rise comes after Bank of England governor Sir Mervyn King said he was "pessimistic" about the short-term prospects for the global economy. | The cancellation of the duty rise comes after Bank of England governor Sir Mervyn King said he was "pessimistic" about the short-term prospects for the global economy. |
He told the Commons Treasury Committee there was "enormous uncertainty" and that he had "no idea" what the outcome of the eurozone crisis was going to be. | He told the Commons Treasury Committee there was "enormous uncertainty" and that he had "no idea" what the outcome of the eurozone crisis was going to be. |
Official data shows the government borrowed £17.9bn in May, more than most experts had predicted. | Official data shows the government borrowed £17.9bn in May, more than most experts had predicted. |