Motoring groups welcome continued fuel duty freeze

PA

Motoring organisations have welcomed the decision to freeze fuel duty for the sixth year in a row.

There were fears that the Chancellor would increase duty for the first time since March 2011, because the cost of fuel has fallen amid tumbling oil prices.

But George Osborne insisted that families "shouldn't be penalised" for that situation.

In response to the announcement, AA president Edmund King said: "We are delighted that the Chancellor has resisted the temptation to increase fuel duty which will bring relief at the pumps for millions of motorists."

RAC chief engineer David Bizley commented: "Motorists will be relieved that the Chancellor has not used low fuel prices as an opportunity to raise duty on petrol and diesel to help reduce the deficit.

"But with the Government's own evidence showing that lower fuel prices are good for the economy, we are disappointed Mr Osborne didn't make a longer-term commitment to freeze duty beyond next year's Budget."

Quentin Willson, of FairFuelUK, described freezing fuel duty as "hugely significant".

He went on: "The Treasury now has five years of evidence to prove that keeping fuel duty low has helped improve GDP, stimulate economic activity and actually improve tax receipts."

Last month, the average price of diesel was 101p per litre, while petrol was 102p per litre.

Oil prices have fallen some 70% since the summer of 2014 due to oversupply and falling demand from emerging nations such as China.

Mr Osborne claimed the policy to freeze duty would result in annual savings of £75 for the average driver and £270 for a small business with a van.

A study by motoring research charity the RAC Foundation published last week found that the proportion of tax in diesel prices is at its highest level in more than a decade.

The organisation's director, Steve Gooding, said: "With VAT and fuel duty already accounting for three quarters of the price motorists pay at the pumps, any increase would have been tantamount to the Chancellor deciding to drive people off the road.

"Instead this freeze will keep the economy moving and help the 60% of people travelling to work by car."

Road Haulage Association chief executive Richard Burnett said the decision would "help retailers and provide a sound base for economic recovery".

Jason Torrance, of public transport charity Sustrans, acknowledged that the Chancellor's announcement would be "popular with many", but he warned that "we can't go on relying on private cars".

He added: "Extra revenue from a tax hike could be used to plug the gap in shrinking council budgets, make rail fares cheaper and build better cycling infrastructure."