Darling postpones increase in fuel duty

The chancellor has announced that proposed increases in fuel duty are to be delayed until October.

In his Budget this afternoon Alistair Darling said the 2p increase will be postponed for six months. Main road fuel duty rates will rise by 1.84p per litre on 1 April 2009, and will increase by 0.5p per litre above inflation on 1 April 2010

The move is likely to be welcomed by motorist and haulier lobby groups.

Environment groups however are expected to express disappointment at the news as a rise could deter people from using their cars, reducing carbon dioxide emissions.

The chancellor gave assurances the government would do more to reduce congestion on Britain's roads, not by simply building more roads and increasing capacity but by introducing more road pricing schemes and setting aside new funding for transport policies in 2009.

With regard to the environment, he announced a moratorium on car tax for the first year for consumers who invested in efficient, environmentally-friendly vehicles. Cars that emitted less than the recommended 130 g/km European standard would receive the tax break.

Additionally, he made a commitment to encourage the production and usage of biofuels in the future, along with an increased capital allowance on environmentally efficient business cars.

The chancellor was clearly concerned by reports suggesting motor vehicles produced 22 per cent of the nation's total carbon emissions. To combat this, he will be recommending the European Commission set a tighter cap on emissions from 130 g/km to 100 by the year 2020.

From April 2009, Mr Darling proposed a major reform to vehicle excise duty in a bid to encourage manufacturers to produce cleaner cars. He also promised to introduce new tax bands on cleaner cars, giving an incentive to drivers to choose the least polluting vehicle.

He referred to the research of independent reviewer Professor Julia King, whose work has indicated savings of 25 per cent can be made on fuel efficient vehicles. He pledged £40 million for a research programme into low carbon vehicle concepts and that the Department for Transport will be collaborating with the low carbon vehicle partnership to explore initiatives highlighted by Professor King's review in order to raise consumer awareness of environmental issues.