Autumn statement: Fuel duty rise scrapped, £1bn for roads

PD-website-George-Osborne 300There was a crumb of joy for Britain’s hard-pressed motorists in Chancellor George Osborne’s downbeat autumn statement, with the announcement that January’s planned 3p increase in fuel duty was to be scrapped.

And the Chancellor also promised to fund some new road-building projects, including upgrades to the A1 in the north-east, widening of the M25 at Thurrock, near the Dartford Tunnel, and an improved link between the A5 and M1.

And lower earners gained some tax benefits. The threshold for high-rate income tax has also moved up while income tax personal tax allowances will go up by £1,335, £235 more than previously announced, which means no tax will be paid on earnings under £9,440. The threshold for the 40% rate of income tax is to rise by 1% in 2014 and 2015 from £41,450 to £41,865 and then £42,285.

But Osborne plans to cut benefits as he admitted the UK economy was still struggling, with austerity measures to be extended to 2018, beyond the next election – leaving Labour shadow chancellor Ed Balls to claim the Conservatives’ economic plans were “in tatters”. Most working age benefits, such as Jobseekers Allowance and Child Benefit, will be go up by 1%, less than the rate of inflation, for the next three years.

CBI director general John Cridland welcomed the promised investment in infrastructure and new tax relief measures for small firms but said businesses now "need to see the chancellor's words translated into building sites on the ground".

AA President Edmund King welcomed the scrapping of planned 3p a litre fuel duty rise, but said more should be done to help drivers. He said: “This decision avoids a new year’s headache and a long hangover for all drivers and is very much welcomed by the AA. Big Ben’s chimes ringing in a nearly £2-a-tank hike in petrol and diesel prices would have back fired on the Government and economy.”

He added: “The Treasury may have thought that a fuel duty increase in the winter, when petrol is usually cheaper, would have been easier. But, toasting the new year with Champagne at a lower duty rate than road fuel underlines successive governments’ failure to spot the difference between a luxury and a necessity.”

Brian MacDowall, London spokesman for the Alliance of British Drivers, said: “All credit to the Fair Play on FuelUK campaign for their wonderful work in putting pressure on the political class to make this decision. But there are problems with any government that feels that 60% fuel duty and 20% VAT is acceptable.”

IAM chief executive Simon Best said: “Cancelling the rise in fuel duty will help to keep Britain’s economy moving. It’s not just good news for motorists - from supermarket food deliveries to life-saving emergency services, the nation depends on its roads. This is a saving for everyone.”

Ian Stuart, Group Managing Director of fast-fit group ATS Euromaster, said the move did not go far enough: “What we really needed to hear was a 3 to 6 pence per litre reduction in fuel duty to encourage growth and consumer spending, while reducing distribution costs to everyone’s benefit.”

IAM’s Best also welcomed the new spending on roads: “Cyclists, motorcyclists, car drivers, lorry drivers and bus and coach passengers should all welcome the £1 billion investment to our roads. Newer roads are safer and should cut journey times.”

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