Fuel duty price hike postponed, but for how long?

With the words ‘scrapped’ and ‘u-turn’ plastered online and in newspapers today, you’d be forgiven for thinking that the Chancellor, George Osborne, has put off the 3p fuel duty rise for good. If the headlines were true, it would no doubt help keep motorists moving, and would keep some campaigning groups happy.

And the potential of injecting that lost tax revenue back into the economy seems, on the face of it, pretty positive. There’s little doubt the economy could do with stimulating, to try and move it out of recession and into growth. But in stimulus terms is it really that significant?

Steering clear from the word ‘scrapped’

The headlines will no doubt generate pleasure for those who’ve been pushing for change and believe this is the result of their persuasive efforts, and derision from those who believe it’s just another u-turn.

However, when you look beyond the headlines, you’ll see that the Chancellor hasn’t actually ‘scrapped’ the fuel duty rise. He has simply put the decision off until (at least) the end of the year. Motorists may be penalised after all, but simply not for an extra four months or so.

Put in those terms, it sounds far less positive in my view. In the short term, those living with reduced bus services (I know my local authority and many others have reduced or removed transport subsidies over recent years) and people living in rural areas, where the car is often the only viable transport option, will be relieved. I guess this is akin to the relief we’re all feeling from petrol prices dropping over recent weeks.

Of course, the question of how the Chancellor plans to plug that gap in revenue (said to be around half a billion pounds) still hasn’t been addressed. But are we to expect the price hike to come into affect in 2013? If so, what do you think about that possibility?

Perhaps you think the shortfall in government revenue should come from other areas, such as motorway toll roads or more congestion charges in major cities?