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Government cancels planned 3p fuel duty increase Government cancels planned 3p fuel duty increase
(39 minutes later)
The government will not go ahead with a 3p-a-litre rise in fuel duty in August, Chancellor George Osborne has announced.The government will not go ahead with a 3p-a-litre rise in fuel duty in August, Chancellor George Osborne has announced.
The move follows a campaign by road users' groups, who argued the change, announced in the Budget, would damage the economy.The move follows a campaign by road users' groups, who argued the change, announced in the Budget, would damage the economy.
Fuel duty will be frozen for the rest of the year, the chancellor told MPs.Fuel duty will be frozen for the rest of the year, the chancellor told MPs.
Labour had threatened to force a House of Commons vote on the issue.Labour had threatened to force a House of Commons vote on the issue.
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."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."
The government was "doing everything we can in very, very difficult economic circumstances", he added.The government was "doing everything we can in very, very difficult economic circumstances", he added.
The chancellor also told the Commons: "The one-off cost of this change will be fully paid for by the larger-than-forecast savings in departmental budgets."
'Difficult decisions''Difficult decisions'
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.
BBC political editor Nick Robinson said the chancellor had responded to pressure from some Conservative MPs and The Sun newspaper - in which Labour's Ed Balls had an article on the subject on Tuesday - who have called for the planned rise to be dropped.BBC political editor Nick Robinson said the chancellor had responded to pressure from some Conservative MPs and The Sun newspaper - in which Labour's Ed Balls had an article on the subject on Tuesday - who have called for the planned rise to be dropped.
Labour had 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 had 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.
Shadow chancellor Ed Balls told BBC Radio 4's Today programme: "Difficult decisions are needed to get the deficit down. That's why Labour put up fuel duty in the past. But we often delayed or cancelled planned duty rises based on the circumstances at the time - including at the height of the global financial crisis." 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, addressing MPs, said road users would be paying 10p a litre more 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.
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."