Mixed reaction to fuel duty freeze

Welcome news, but conerns it could be hiked next year


Fuel prices

Motorists are pleased that fuel duty will remain frozen this year - but some fear it "sounds alarm bells" for next year.

In his Budget, George Osborne 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.

To many cheers, he said: "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."

Quentin Willson of FairFuelUK said the campaign is "pleased" that Mr Osborne continued the freeze.

"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," he said.

The FairFuelUK campaign tweeted: "The Chancellor has listened." It also said "well done George".

But 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."

Mr Osborne also announced reforms to vehicle excise duty, reducing the number of bands to three.

"From 2017, for brand new cars only, we will introduce new VED bands," he said. "The duty in the first year will be set according to emissions, like today, but updated for new technology.

"Thereafter there will be three duty bands - zero emission, standard and premium.

"For standard cars - that covers 95% of all cars sold in the UK - the charge will be £140 a year.

"That's less than the average £166 that motorists pay today.

"There will be no change to VED for existing cars - no one will pay more in tax than they do today for the car they already own."

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".

He described it as a "major reform to improve the infrastructure and productivity of our economy and deliver a fairer tax system for the motorist".

Dr Doug Parr, Greenpeace Policy director said the changes to VED provide "less incentive for the low carbon vehicles that, ironically, the UK automotive sector is a leader in".

He added: "It diverts money into roads at a time when health and best interest is served by encouraging active travel like walking and cycling. This feels like a very 1980s approach."

Mr Osborne said they have created Transport For The North which he says he is now putting on a statutory footing, adding: "I can announce £30 million of funding to this new body as it connects northern England together, with seamless oyster-style ticketing across the region."

He also said the "massive" £7.2 billion investment in transport in the South West is under way.

The Chancellor said one of the first pieces of advice he received in the Treasury was to cancel the plan for the Crick Institute, Tate Modern extension and Crossrail – but he said he rejected that advice, because he has always believed it is our nation's great advantage that we have one of the world's great capitals.

"Now we're working with the mayor on what this city will need in the future, with projects like Crossrail 2 and the exciting development of the Olympic village," he said.

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".

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.

Summer Budget 2015: The Highlights

Read more on AOL Money:

Enjoy low petrol prices, they may not last long

Sainsbury's offers petrol at under £1 a litre

London diesel drivers face extra £10 penalty