What the Budget means for motorists
Fuel duty will be cut by 1p per litre from 6pm, and an additional £100million
given to councils to fix potholes.
3:03PM GMT 23 Mar 2011
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An immediate reduction in fuel duty and more money for councils to repair
Britain's crumbling road network - those were the two headlines for
motorists from today's Budget, delivered by Chancellor George Osborne.
Admitting that "the price of petrol has become a huge burden on families",
Mr Osborne went on to describe how the cost of filling up a typical family
car had increased by £10 in the last six months.
Before stating how the government would help motorists faced with such high
prices, he set out to explain what's within its control and what's not. "Britain
is not in charge of world oil prices", he said. "But British
Governments are in charge of the duty we levy on petrol."
Mr Osborne went on to say that, after consideration, the government had
rejected a separate VAT rate for petrol on the grounds that it would be "illegal".
However, Labour's fuel escalator, which adds a penny on top of inflation,
will be cancelled and a new "fair fuel stabiliser" introduced.
As part of this, the "supplementary charge levied on oil and gas
production will increase from 20 per cent to 32 per cent," said Mr
Osborne, raising £2billion of additional tax revenue from oil companies.
This will be used to delay next week's planned fuel duty increase of almost
5p per litre until 2012 (and the planned April 2012 inflation rise until the
following summer).
The "fair" part of the fuel stabiliser involves the possible
reintroduction of the escalator, and a reduction in the higher rate of oil
tax, should oil prices fall below $75. "That is how it will work,"
said Mr Osborne. "No escalator when the oil price is high. No extra tax
on the profits of North Sea oil companies if the oil price falls and stays
low."
The Chancellor also announced that further help to motorists would start at
6pm today, when fuel duty would be cut by 1p per litre.
Commenting on the subject of fuel duty, IAM chief examiner Peter Rodger said: "Reducing
fuel duty is a welcome break for hard-pressed motorists and businesses, but
eco-driving is the only guaranteed way to reduce motoring costs. It's no
longer an ethical choice, it's a money-saving essential - especially in
rural areas where driving is a necessity."
Elsewhere in the Budget, the Chancellor promised £100million of additional
funding for councils to fill potholes. Warranty Direct managing director and
founder of Potholes.co.uk,
Duncan McClure Fisher, said: "Motorists will appreciate this extra
support as it will mean less cars get damaged. It's another signal that the
Government is recognising the need to support motorists, but the focus needs
to be on local and minor roads.
"It's not a solution to the problem," he added, "but at least
it's a step in the right direction."
Other points of note for motorists were that vehicle excise duty rates will
increase only by inflation, while those for HGVs have been frozen.
Mr Osborne also announced that Approved Mileage Allowance Payments, which have
not increased since 2002, will rise from 40- to 45p per mile.
"And I can tell the House that we will extend this relief to cover
volunteers travelling as passengers – as charities and others have been
calling for over many years", he said.
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