Fuel duty: The straw that would have broken drivers’ budgets

With the ‘cost of living’ top of UK’s major concerns* and volatile UK pump in the past 12 months, a fuel duty hike would have been the straw likely to break UK drivers’ budgets. The Chancellor’s decision to scrap the proposed fuel duty hike in September is therefore very welcome and makes good sense, according to the AA.

Edmund King, AA president, said; “A September a fuel duty hike would have been the last straw likely to break UK drivers’ budgets and would have led to a summer of discontent. The freeze is a pragmatic move and will bring some relief at the pumps. Already 76% of AA members are cutting back on journeys, household expenditure or both, due to the high cost of fuel.

With current fuel prices at 138.42 for petrol and 145.24 for diesel, drivers will welcome the scrapping of the fuel duty hike with relief rather than with joy. Prices are almost 5p a litre higher than when the Chancellor froze fuel duty in March 2011.”

The latest fuel price swing, through February and March 2013, peaked at 140p a litre. Had January’s scheduled 3p rise in fuel duty gone ahead, attracting an additional 0.6p in VAT, it would have propelled the UK average petrol price well beyond the current record price of 142.48p.

As well as a backlash from families and businesses that rely on cars and other vehicles, the Treasury is very likely to have got less revenue. Such is the tightness of family budgets that, during the price surges of March and September last year, UK petrol consumption fell substantially.

On infrastructure the Chancellor said that “we are spending more on new roads than in a generation” however detailed future plans will not be published until June. The AA still believes than more needs to be spent on road maintenance and pinch points. King added: “If we are spending more on new roads than in a generation then it is a poor reflection of a pot-holed and congested generation.”

*Cost of living moves to top of UK’s major concerns

In 20 years, the cost of living has moved from the near the bottom of major concerns in the UK to the top, research among nearly 20,000 AA members has found.

In Today’s Budget, the Chancellor has decided not to press ahead with a £7.64-a-month hike in petrol costs for a two-car family.

If September’s planned increase in fuel duty went ahead, the expected 3p increase and the 0.6p added in VAT would lift the cost of a 70-litre Ford Mondeo tank of petrol from £97.12 to £99.64 (based on the current average UK petrol price of 138.74p a litre).

Andrew Kirkley
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  • 20th March 2013

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