Budget 2015: Osborne maintains fuel duty freeze

a petrol pump
a petrol pump

Fuel duty will remain frozen this year, Chancellor George Osborne has announced.

He also said he was creating a “new roads fund” and pointed out that in the last 25 years France has built more than two and a half thousand miles of motorway while Britain has built just 300.

Mr Osborne said vehicle excise duty (VED) was used to fund roads but not any more, and said from 2017 there will be new bands for VED for brand new cars, with most cars paying £140 standard charge.

He said “every single penny raised in vehicle excise duty in England” will go into the new roads fund to pay for “sustained investment our roads so badly need”.

The Chancellor described it as a “major reform to improve the infrastructure and productivity of our economy and deliver a fairer tax system for the motorist”.

To many cheers, he added: “I can also confirm that there will be no changes to the plans for fuel duty I set out in March. Fuel duty will remain frozen this year.”

Campaigners FairFuelUK wrote an open letter to Mr Osborne this week saying he could “sabotage” the economic recovery if there was an “inflation based fuel duty rise”.

They wrote: “Dear Mr Osborne, FairFuelUK and the undersigned MPs from all parties warn George Osborne that an inflation based fuel duty rise in the coming emergency Budget or in future years will lower GDP, cost the UK £8 billion in reduced economic activity, raise inflation and sabotage one of the slowest economic recoveries this country has ever seen.”

In March, Mr Osborne pleased motorists by extending the freeze on fuel duty as well as announcing a round-the-regions package of transport improvements.

Back then he said he was carrying on the no-rise policy by scrapping the planned September increase, which would have added 0.54p a litre to prices at the pumps.

Quentin Willson of FairFuelUK said the campaign is “pleased” that Mr Osborne continued to freeze fuel duty.

“Our 1.1 million supporters will be somewhat happier that whilst this tax still remains the highest in the EU, a freeze will help keep their high road transport costs somewhat lower than what was rumoured to be introduced in this Budget.

“Our recent empirical economic evidence sent to all MPs and the Treasury has made them realise that 40 million UK drivers will not tolerate being used as that continual cash tax cow. The fight goes on for a cut.”

The FairFuelUK campaign tweeted: “The Chancellor has listened.”

It also said “well done George”, adding: “MPs tell us our lobbying & economic evidence prevented a rise in Fuel Duty. A big thanks to our 1.1m supporters.”

RAC chief engineer David Bizley said the fuel duty freeze “sounds alarm bells for next year as by not extending the freeze further it potentially signals the country’s first increase in duty since 2011”.

He added: “While oil prices are expected to stay low, the oil market is notoriously hard to predict so there is always the chance that fuel prices will be considerably higher by the time of the Budget in March 2016 and any increase in duty would therefore have a negative effect on the economy.”