Brown hints 2p fuel duty rise to be halted

Brown hints 2p fuel duty rise to be halted

Gordon Brown yesterday gave his strongest signal yet he is going to abandon the 2p-a-litre increase in fuel duty within weeks, as oil prices hit yet another record high.

It is likely he will announce before the Glasgow East byelection due on July 24 that the planned increase will be frozen. It is possible for the government to do this even if parliament is not in session. The hint came as a barrel of Brent crude topped $146 for the first time.

Pressed on the 2p duty increase due to take effect on October 1, the prime minister said that often such rises had not gone ahead: "You'll find that in most years since 2000 the duty has actually been frozen."

Any such decision was for the chancellor, Alistair Darling, he qualified himself, but added: "It is clearly a matter that will be looked at very, very carefully over the next few weeks." The prime minister's spokesman would not say when the announcement would come: "Timing is entirely a matter for the chancellor. There is no particular reason why this would have to happen while parliament is sitting."

Ministers argue there is no point in delay, but the Treasury may want to wait, to be seen to be in charge, and also to see the state of public finances.

Darling himself gave a strong hint he is willing to move on fuel duty, but not on vehicle excise duty. He told the London Evening Standard: "The bigger question for motorists frankly is the fuel duty. That is something you pay every.....continued below

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week, not once a year; and that is something we in government are very focused on."

Brown rejected the view that lower taxes on fuel in continental Europe made it impossible for UK hauliers to compete. "As far as continental hauliers are concerned, there are higher VAT rates, higher social insurance payments, higher taxes in these countries," he told his twice-yearly session with the liaison committee of MPs who chair select committees.

The prime minister would be severely damaged if Labour loses the Glasgow byelection, but is likely not to face serious calls to stand down - partly as MPs will have left Westminster for the summer.

As challenger in the byelection, the Scottish National party says it will make fuel duty the issue, just as the 10p tax rate dominated the Crewe byelection. SNP MP Angus Robertson said yesterday: "The byelection is only two days old and already Brown is wobbling ... the voters of Glasgow East now have the opportunity to send a message to Gordon Brown that the rise must be scrapped." He claimed that Scotland's share of Brown's "oil bonanza" from increased tax revenue would mean £40 a household in Glasgow East.

Sitting MP David Marshall resigned on health grounds; he held the seat with a majority of 13,500 over the SNP.

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