The Guardian Newspaper succinctly summarised the Chancellor's actions this week - "the prospect of fighting an election against a backdrop of record petrol prices [...] led the chancellor to postpone a 3p-per-litre increase in fuel duty."
Rising oil prices has caused a sharp increase in the cost of petrol and diesel at the pumps with Alistair Darling announcing to the House of Commons that the planned increase in fuel duty was now to be staggered to "ease the pressure on family incomes."
What does this mean to the typical van driver? Instead of petrol and diesel prices increasing by 3 pence per litre (to an amazing 123p in some parts of the country!), from Thursday they will only increase by 1 pence. The Treasury will then increase the duty by 1 pence per litre on 1 October and by a further 0.76 pence per litre on 1 January 2011.
According to the AA, the average van driver or car owner will see their fuel bills increase by approximately £38 a year following the April increase alone. That's on top of the previous increases caused by oil prices (approximately £50 a year in recent months) and doesn't include the effect of the additional 1.76 pence hikes to follow.
Motoring and road haulage groups had called for the whole 3 pence rise to be shelved in the face of a faltering economic recovery and the record pump prices. However, these calls were largely ignored by the Labour government.
Despite rising crude oil prices and the decline of the pound against the dollar (the currency in which oil is priced) having already forced pump prices to their highest ever levels in recent weeks, Alistair Darling said he was committed to a policy of fuel duties. The now Chancellor hinted that fuel prices would increase again in future years with prices at the pumps increasing up by inflation plus 1p a litre each April until 2014.
However, van drivers and other motorists received a boost with the news that Mr. Darling is to invest £285m to convert motorway hard shoulders into vehicle lanes in a bid to ease congestion.
