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Chancellor caught in the headlights on fuel prices

22 February 2013

9:23 AM

22 February 2013

9:23 AM

George Osborne is getting used to the twice-yearly battle that precedes an autumn statement or a budget when motorists, newspapers and some of his own MPs start haranguing him on fuel. It’s the Times’ splash today, with petrol prices expected to rise to their highest-ever levels, and campaigners calling once again for the Chancellor to cancel September’s fuel duty increase when he makes his Budget statement next month.

As I reported back in January, Tory MPs want this Budget to be another cost-of-living statement, which, like the autumn, allows the Coalition to demonstrate that it is doing all it can to hack away at the major pressures on voters’ wallets. The Sun’s ComRes poll this week found that 39 per cent of voters want the Chancellor to cut petrol prices by 14p a litre, so the pressure is there from voters, too. So another cancellation or delay would be a quick way of Osborne showing he listens to the concerns of hardworking families, striver drivers, or whatever name he wants to give them.

But there are two problems. The first is the obvious point that fuel duty raises money, and Osborne isn’t mulling cancelling them in a time of plenty. As Jonathan explained yesterday, he’s got quite a task ahead to be able to say the deficit is going down in every year of this parliament.

The other is that continually delaying the inevitable is hardly the hallmark of a calm, strategic Treasury; more one caught in the headlights and panicking. In its report on the Autumn Statement, the Treasury Select Committee pointed out that planned increases in fuel duty were being repeatedly cancelled or deferred, as shown in the table below:

(You can view a larger version of the table here.)

The Committee said that ‘recent government policy on fuel duty has failed to provide either the certainty or the stability that are the hallmarks of good tax policy. The Chancellor must use the 2013 Budget to set out a clearer strategy for fuel duty over at least the medium term’. If he doesn’t, the Chancellor will know what to expect in the run-up to every Budget and autumn statement that he faces over the next few years.

Join us after Osborne delivers his Budget to discuss ‘Whatever happened to the recovery?’ Andrew Neil, Fraser Nelson and James Forsyth will discuss what the 2013 Budget means for Britain’s economic future on 20 March. Click here to book tickets.

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