Treasury to cut tax on ‘green’ fuels

The announcement was made by the Treasury financial secretary Stephen Timms, who said any decision on the actual value of the rate cut would be announced on 7 March.

In his pre-budget report in November, Gordon Brown promised to reduce the duty on ultra-low sulphur by 2p per litre, in recognition of its environmental benefits, subject to consultation and it being widely available.

The decision to extend the cut to all unleaded fuels, followed fears the greener fuel would not be sufficiently available to benefit all motorists by the end of March

Despite being confident the oil companies were on track to provide ULSP across the UK by the deadline, Timms added it was not yet known whether the oil industry would meet the 100% capacity target.

Some independent retailers are already supplying up to 50% of their customers with the more eco-friendly fuel, but Timms said retailers were constrained by the capacity of oil refineries in the UK, and the government’s unwillingness to import the petrol, because of potential harmful effects on the wholesale and retail oil markets.

He told the FT: ‘The government’s objectives are to ensure everyone should be able to share the environmental benefits of ULSP, and the benefits of the duty cut associated with it. It is in the whole country’s interests that these objectives are achieved, and achieved as smoothly as possible.’

The proposal was slammed by both the Tories and the Liberal Democrats as a pre-election stunt.

Shadow chancellor Michael Portillo said the cuts would incense a public already ‘fed up with spin, double-speak and obfuscation’, and added taxpayers would not be taken in by such bribery.


The Pre-Budget statement

Budget 2001

Related reading