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Another U-turn: Darling scraps 2p rise in fuel duty

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"The global credit crunch and sharp rises in world oil prices have pushed up prices at the pump,” he says. “Today’s decision will help motorists and businesses get through what is a difficult time for everyone.”

The decision to defer the increase in duty had been taken in response to sharp rises in world commodity prices, with the price of oil almost doubling over the past year.

But does Darling’s decision go far enough?

“Given that fuel has increased by about 25 per cent over the past year, the announcement about postponing the 2p rise in petrol duty only represents a saving of about £1 per tank for a normal family car," says Kate Lester, founder of Surrey-based Diamond Logistics.

"This is clearly an inadequate response from the government – who should perhaps look at emulating Tory proposals of cutting fuel duty when oil prices rise. Today’s decision doesn’t address the long-term issues linked to rising fuel prices. What’s the government going to do when prices reach $300 a barrel?

Karen Dee, head of infrastructure at the Confederation of British Industry, agrees that the government needs to go one step further: "This will be a welcome relief for hard-pressed hauliers, businesses and other motorists, especially since fuel prices have risen so much. But in the longer-term, the government needs to level out the playing field so that UK hauliers can compete with their foreign counterparts who enjoy far cheaper fuel prices."

The Forum of Private Business (FBP) isn’t impressed, either. "While postponement of the 2p fuel duty rise is welcome news for our members, the FPB would like the government to go further and actually cut VAT on fuel instead of deferring the increase every six months," comments Nick Palin, the FPB’s finance and administration director. “With surging oil prices, adopting the Freight Tranport Association’s proposals to half fuel duty would bring some relief to small businesses.”

Meanwhile, Liberal Democrat Shadow Chancellor Vince Cable has hit out at Darling’s U-turn, claiming "it’s utter madness to make an early decision when no one knows either what the price of oil will be or what state the public finances will be in come the autumn.

"He’s been panicked into making a snap decision.

“The Government has no credibility over fuel duty. Labour froze fuel tax when oil cost $30, then $50 and then $140 dollars a barrel, citing high oil prices, while being content to see the tax rise at other times.

“Alistair Darling must explain what he thinks fuel duty is for.”

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