Osborne urged to cut fuel duty as prices edge towards new high

Saturday, 23 February 2013 12:47

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Petrol prices in the UK have risen by 6p a litre since early January and could reach record highs as market speculators and the weak pound combine to raise the cost of filling up at the pumps.

The Chancellor, George Osborne, is being urged to cut or freeze fuel duty in next month's budget as UK consumers continue to battle against high inflation and low pay rises.

A 3p-a-litre increase in fuel duty is planned for September, but Conservative MPs are tabling a Commons motion to get it cancelled.

New figures show that the high cost of fuel is reducing the amount that consumers spend at the pumps with the knock-on effect of lowering the Treasury's tax-take.

Quentin Willson, of campaign group Fair Fuel UK said: "Fuel prices are out of control and are now the biggest financial issue faced by UK consumers.

"In January consumers bought 100million litres less than they did in December 2012 costing the Treasury £60million a month in lost revenue.

"We are urging the Chancellor to decisively cut fuel duty."

The latest AA fuel price report said that prices have risen by 5p-a-litre in the last month taking the average cost of a litre of unleaded fuel to 137.9p. This means the cost of filling up a 70-litre petrol tank has risen by £4.37 in the last six weeks and is now almost £100.

Edmund King, president of AA, said: “Although we had a disruptive period of snow between the 18th and 25th of January, the impact of the weather was nothing like that suffered during the January of 2010. The blame for this latest collapse in petrol sales rests squarely with stock market speculation.

“Speculators have pumped up the wholesale price of petrol at a time of year when cars consume the most. Currency gambling has devalued the pound, adding a further 1.6p a litre to the 7.9p a litre increase in the cost of wholesale petrol since the start of the year.”

Diesel has increased in price by 4.78p-a-litre to 145.1p. The UK now has the 13th highest petrol prices in Europe and the fourth highest for diesel.

Petrol prices reached a record high in the UK last April when the average price of a litre of petrol shot up to 142.48p-a-litre.

The AA warned that this level could be insight because “there is another 3p rise in the pipeline.”

The motoring organization said that one impact of the continued high prices combined with high inflation and low wage increases is that UK petrol sales in January fell to the lowest level for 23 years, according to the tracked figures from HM Revenue & Customs.

UK motorists used 1.465 billion litres of petrol last month, 5.4 per cent lower than the same month in 2012 and down 14 million litres on the previous all-time low figure set in March 2012 and almost 100 million litres less than was used the month before in December.

Mr King called on the Chancellor, George Osborne, to scrap his planned 3p-a-litre hike in fuel duty that is expected to be announced in his budget next month. The government previously postponed the duty rise and then cancelled it.

He said: “Given the lashing motoring families and UK businesses are taking from speculator-driven fuel prices, we hope the Chancellor spells out clearly in the forthcoming Budget that he can feel the pressure rocketing fuel price inflation places on families and business, and that he will cancel the September rise if that strain is too great.”

The coalition government has reversed the fuel duty escalator introduced by Labour that would have seen prices rise even further.

A Treasury spokesman said: "Thanks to Government action, fuel duty has not risen in two years and is now seven per cent lower in real terms than in May 2010."

Motorists in Yorkshire, Humberside and the north of England pay the lowest amount for petrol at an average of 137.6p a litre, whilst prices in London are at 137.8p-a-litre and Northern Ireland as the most expensive fuel at 138.7p.

 

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