Alistair Darling

Darling promises to review fuel duty hike

But Downing Street plays down the chances of a U-turn on increased road tax

Written by BusinessGreen.com

The chancellor, Alistair Darling, has given the clearest hint yet that he could again defer a 2p increase in fuel duty planned for October while the government appears to be steeling itself for a fight over proposed changes to road tax designed to incentivise drivers to choose more fuel-efficient vehicles.

In a move likely to infuriate environmentalists, Darling promised to review plans for the increase in fuel duty in response to growing concerns over soaring fuel prices.

Speaking on BBC Radio 4's The World At One, the chancellor said: "I will return to the issue nearer the time – I will take into account what is happening in the oil market and see what is best to help out families and businesses. I fully intend to come back to that before October."

Green groups had urged the government to stick with the planned increases, despite yesterday's protest from hauliers claiming that rising diesel prices would force them out of business.

Greenpeace had said that it supports the fuel duty escalator, which ensures fuel duty should rise at above inflation rates to encourage wider use of fuel-efficient vehicles. Meanwhile, Friends of the Earth's head of campaigns, Mike Childs, said that despite recent increases in fuel prices, "the overall cost of motoring has actually fallen in real terms while the cost of public transport has risen – this trend must be reversed".

However, Downing Street today joined the Treasury in downplaying speculation over a U-turn on proposed changes to vehicle excise duty that would increase road tax for the most polluting vehicles registered after 2001 by up to £200. The government said that despite comments yesterday from business secretary John Hutton and justice secretary Jack Straw that the government was "listening" to people's concerns about the changes, it remained committed to the reforms, which it argued would promote adoption of lower-carbon vehicles.

Earlier today, Gordon Brown joined Alastair Darling in meeting oil industry leaders to press for an increase in production from the North Sea.

After the meeting in Banchory, near Aberdeen, Mr Brown said that he wanted to "incentivise not only existing fields, but new fields, to come on stream".

He was speaking as Hutton announced approval for two new North Sea oil fields, which are expected to come online in the first half of next year and deliver a total of 50m barrels of oil.

However, experts warned any increase in production would not affect oil prices in the short term, while environmentalists accused the government of again undermining its green credentials. "The government should be developing urgent plans to wean us off our addiction to fossil fuels," Friends of the Earth's Tony Juniper told the BBC, "not increasing UK oil production".

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