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Motoring news

Budget eases pressure on motorists

25/03/2010

Motorists have ducked a feared surge in pump prices, after the chancellor announced that rises in fuel duty planned for 1 April would now be staggered.

And in his final Budget before the upcoming general election, Alistair Darling also announced £100 million towards emergency road repairs made necessary by this winter's severe weather.

But while April's 3p rise in the duty on a litre of fuel has now been staggered - with a penny levied on 1 April, a penny in October and 0.76p in January 2011 - the fuel industry has pointed out that other changes to taxation will drive fuel up by more than a penny in April.

Reacting to the Budget, the Petrol Retailers Association suggested that the chancellor had employed 'smoke and mirrors' by not mentioning in his speech the effect of a halted incentive for biofuel producers. The higher cost of the fuel, which makes up 3% of all petrol sold in the UK, would add another penny to the pump prices, it said, resulting in an increase including VAT of around 2.35p per litre.

The AA, which had warned that the average price of petrol might hit £1.24 per litre by Easter, gave a guarded welcome to the staged duty rises - although it warned that the Treasury should be prepared to reconsider these proposals if prices at the pumps continue to rise. Nevertheless, president Edmund King said that he was "delighted" with the £100 million funding for pothole repairs, pointing out that this was the entire amount spent on filling potholes last year.

Green groups also welcomed the pothole funding, along with announcements of funding for greener buses and the establishment of a 'Green Investment Bank' - a £2 billion fund for low-carbon infrastructure projects that will initially focus on wind power.

However, the Campaign for Better Transport said that the chancellor had "ducked" tougher transport spending choices, and that short-term pressures could result in fare increases on public transport.

"Spending on greener transport and fixing roads is welcome," said director Stephen Joseph, "but the real choices will come after the election.

"The danger remains that the next Government will continue to hike rail fares while abandoning planned fuel duty increases, thus making motoring cheaper. Fuel duty increases should be linked with reductions in rail fares and increased investment in public transport."