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Chancellor suggests fuel duty rate may rise for first time since 2010

Freezing fuel duty "must be balanced" against public funding needs, Chancellor argues

BRITAIN’S FUEL duty rate could soon be raised for the first time in nearly a decade, the Chancellor of the Exchequer has suggested.

Speaking to Members of Parliament during Treasury Questions today, chancellor Philip Hammond said “the benefits to hauliers and motorists of freezing fuel duty must be balanced against the costs of the exchequer in the context of our need to fund our public services”; adding that the Treasury will “continue to keep [fuel duty rates] under review”.

The rate of fuel duty (an additional tax on petrol and diesel fuel that’s charged separately from VAT) has remained at 57.95p per litre since April 2010, when then-chancellor George Osborne first froze the tax at that rate.

While freezing fuel duty has saved motorists money at the pumps, it has had a negative impact on public financing. When Mr Hammond’s September 2018 budget was announced, it was confirmed the decision to maintain the fuel duty freeze would set the Treasury back another £800m per year.

In June 2018 campaign group Greener Journeys argued the government would need to commit to increasing fuel duty in line with inflation “at a minimum” in order to reduce traffic, congestion and vehicle emissions.

However, responding to the chancellor’s comments, lobby group FairFuelUK called any increase in fuel duty “political madness”.

In a statement, it said: “[The] UK’s 37m drivers are already the highest taxed in the world … Independent economists, such as the CEBR and even the Treasury itself, have shown that lower fuel duty is good for jobs, GDP, inflation, growth tax revenue and consumer spending.”

Mr Hammond today also suggested he would continue to encourage the take-up of electric cars through taxation. Asked by Labour MP Barry Sheerman whether the government was developing a “modern taxation system that encouraged sustainable transport”, the Chancellor claimed the government had a “good track record on decarbonisation” and said it would “go on seeking to change behaviour through a carefully-constructed tax system”.

Mr Hammond also repeated his plan from Budget 2018 that VED (road tax) in England would be invested back into the road network from 2020, via a dedicated national roads fund (NRF). The chancellor claimed this extra financial support would see £28.8bn spent on improving and upgrading the road network between 2020 and 2025, of which £25.3bn would be invested in “strategic roads”.

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