U-turn on fuel tax rise

Gordon Brown today gave some relief to motorists and hauliers by confirming the Government will postpone the 2p increase in petrol and diesel duty due in October.

The soaring cost of fuel at the pumps forced Chancellor Alistair Darling to delay the rise after hints by Treasury ministers that the increase, postponed from the Budget in March, would not go ahead.

Mr Darling said the move would help motorists and businesses "get through what is a difficult time for everyone".

The RAC said: "This is welcome news but it does not go far enough. We would like to see the Chancellor not just postpone future rises but actually cut fuel duty."

The Freight Transport Association welcomed the announcement as "excellent news", but stressed it was "small beer" compared with the increased costs faced by hauliers. "It would have been unthinkable of the Chancellor to have gone ahead with this increase in the autumn," said a spokesman.

The announcement came just hours before MPs were due to debate Tory proposals for a change to fuel tax proposals which would mean duties being reduced if the cost of fuel rises but rise if the price of oil falls.

And it came with just eight days to go to the crucial Glasgow East by-election which MPs believe could decide the future of Gordon Brown's premiership.

With unleaded petrol selling at around 120p a litre, and diesel at well over 130p, Mr Darling was under severe pressure to give motorists some good news.

However, the Government's opponents will denounce the timing of the Chancellor's announcement as cynical since Treasury officials had previously said no decision would be taken until nearer the time the 2p rise was due to take effect at the pumps.

Opposition leaders will also point to Mr Darling's mini-budget decision to give a £2.7 billion tax hand-out to millions of basic rate taxpayers in an attempt to defuse the 10p tax rate row just days before the Crewe and Nantwich by-election.

Labour went on to lose the by-election to the Tories, and the Scottish National Party say they are confident of winning Glasgow East despite an opinion poll last weekend showing Labour 14 points ahead.