Relief for rural West as fuel duty rise ditched
Chancellor George Osborne has offered respite to hard-pressed Westcountry motorists by scrapping a planned 3p rise in fuel duty and freezing the tax for the rest of the year.
The unexpected announcement, which will cost £500 million, was welcomed by the region's MPs and rural campaigners who have warned the rocketing prices at the pumps are crippling communities in the countryside.
Announcing the measure to cheers from Conservative benches in the Commons, Mr Osborne said fuel duty would now be 10p a litre lower than under the plans inherited from Labour.
"We are on the side of working families and businesses and this will fuel our recovery at this very difficult economic time for the world," he said.
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The announcement followed a question from Sarah Newton, Tory MP for Truro and Falmouth, who was recently injured in a fall, who told Mr Osborne: "If I wasn't on crutches I would be jumping for joy."
She added: "This is particularly good news for small businesses who need to get their goods to markets upcountry, hard-working families and visitors to the region. Our pump prices in rural areas are much higher than in urban areas. This shows the Chancellor has listened to people in Cornwall."
The AA said deferring the 3.02p-a-litre increase in August until next year will spare a two-car family from a £6.41-a-month leap in petrol costs.
Had it gone ahead, from petrol sales alone it would have siphoned £1.6 million a day from consumer spending into the pump and knocked out a third of price cuts since the record highs in mid-April.
The August rise has now been deferred until January next year, at a one-off cost to the Exchequer of £550 million, Treasury sources said.
Barney White-Spunner, the executive chairman of the Countryside Alliance, said: "In March I described the car as an 'unaffordable necessity' for many rural families, because the cost of running a vehicle in the countryside has increased far beyond any rise in rural wages.
"So the Chancellor's decision to scrap the planned rise in fuel duty is very welcome and a timely boost for the rural economy. Although times are tough in the countryside, where a car is an essential part of living, this freeze will go a long way to helping out hard-pressed rural motorists."
The boost to motorists can be paid as a result of departmental savings across Whitehall, the Treasury said.
Labour had urged Mr Osborne to scrap the rise, with shadow chancellor Ed Balls calling for the Government to use the £500 million underspend from the Olympics to fund the move.
But Treasury sources insisted Mr Osborne's announcement had been under consideration for some time.
David Laws, Liberal Democrat MP for Yeovil, said: "A 3p rise in petrol prices would have put more stress on households at a time when the Government is trying to ease the pressure on family budgets.
"Economic conditions are tough, and we will do all we can to help families deal with the difficulties they face."
Ed Balls MP, Labour's Shadow Chancellor, in response to George Osborne's U-turn on fuel duty, said: "This is the fastest U-turn in history.
"With U-turns on petrol, pasties, caravans, charities and churches, George Osborne's Budget is now in tatters – a true omni-shambles of a Budget from a part-time Chancellor whose reputation is now badly damaged."