Chancellor Alistair Darling is understood to be prepared to postpone a 2p rise in fuel duty until autumn, following a backlash from motorists concerned about the soaring cost of living.

He believes more sophisticated environmental taxes such as penalising ‘gas guzzlers’, are more likely to encourage ‘green’ behaviour, The Daily Telegraph reports.

As oil prices hit a new high of $US107 (₤53) a barrel yesterday, pushing the average cost of a litre of unleaded petrol to more than 105p – a 20% hike in 12 months – a Treasury source said the government understood rising fuel costs were of increasing concern and a delay was likely.

‘Darling does want to send out a signal that fuel use needs to be cut and people have to pay for the environmental damage. However, previous fuel duty rises have been delayed,’ the source said.

Further reading:

Darling puts finishing touches to green budget

Read story in The Daily Telegraph