The weight of public opinion meant that George Osborne was virtually compelled to cut fuel duty in yesterday’s Budget. But the reality is that motorists are unlikely to feel better off this year.
On the face of it, the 1p-a-litre cut in fuel duty in this year’s Budget was good news for motorists – some relief from current record prices at the pump.
Better news still was the Chancellor’s decision to scrap the 1p-a-litre duty escalator and delay April’s inflationary rise on fuel duty.
All told, if this had gone ahead, with VAT added this would have amounted to about 5p-a-litre. So, as George pointed out, we’re actually going to save (a theoretical) 6p-a-litre when filling up.
It’s a welcome gesture, but the price of diesel at my local garage jumped a staggering 4p-a-litre overnight the other week. And, lest we forget, the Chancellor also put fuel up by 3p-a-litre in January. So I can’t see many motorists feeling better off.
Not a fuel duty stabiliser
There was a lot of talk about the new Fair Fuel Stabiliser. Essentially, this means scrapping the fuel duty escalator (which adds 1p to a litre on top of inflation each April), reducing duty by 1p, and taxing North Sea Oil companies harder while the price of oil remains high.
When (or more pertinently, if) the price of oil comes down to around $75 a barrel, oil company taxes will fall, and the government will re-introduce the fuel duty escalator for drivers.
But this is a far cry from the fuel duty stabiliser promised by the Tories in their election manifesto. That proposed keeping the price of fuel broadly static at the pump (within 5p-a-litre either way) with duty levels flexing as the price of oil rose or fell. That would have pleased a lot of drivers, but has obviously proved too complex to introduce.
By contrast, the measures in yesterday’s Budget offer drivers no protection against rising oil prices. As George Osborne himself said on BBC Breakfast today, ‘I can only control the duty on fuel, not global oil prices.’ The reality, given the situation in Libya and current levels of oil speculation on the markets, is that our 1p (or even 6p) relief at the pump will be wiped out within a week or two.
Car tax is rising
On top of that, most of us will have to pay more for a tax disc from April onwards. The prices for most mainstream cars will rise between £5 and £10 a year (due to inflation).
Of course, it would be churlish to expect big handouts from a government trying to steer a path through an economic disaster zone. But let’s not have the wool pulled over our eyes. Motorists are still just as vulnerable to rising oil prices as we were before, and there’s little chance of them falling soon.
My advice is to fill up now at your cheapest local forecourt (I tend to use petrolprices.com to find the cheapest fuel) and then hope for the best. That, I suspect, is exactly what Mr Osborne is doing. Do you think the Budget did enough for motorists? How will it affect you and your driving habits?