Pre-Budget Report Preview - Fuel issue dominates political landscape.

The prospect of a second fuel blockade bringing Britain to a halt if he gets it wrong is dominating the approach to the event which will set the scene for next summer’s expected general election.

The traditional purpose of the statement has been to set the economic scene for next spring’s full Budget and has primarily been concerned with expenditure. But the triennial public expenditure review system inaugurated by Brown has reduced that element.

Besides transport taxation Brown faces issues such as the level of the basic state old age pension – in which he and prime minister Tony Blair suffered a humiliating defeat at Labour’s autumn conference in Brighton.

And Brown will want to signal broad intentions for next spring apart from the issue of fuel – and move further towards incentives for business creation, particularly in the technology sector.

Details will, however, be delayed until next Spring when Brown takes his Budget judgement, with a growing ‘war chest’ with which to engineer a package of tax cuts and public services spending to assist a pro-government climate.

On fuel, Brown remains determined to avoid expensive across-the-board cuts which, with world oil prices rising, would have little apparent effect on garage forecourts – although this is a key demand of farmer and small haulier protesters.

Instead the emphasis will be on cuts – possibly in vehicle excise duty – designed specifically to encourage the use of more efficient and environmentally-friendly engines.

And there appeared to be a head of steam behind the so-called Brit Disc – which would apply to incoming continental competitors as well as UK operators, helping to produce a more level playing fuel in the haulage industry.

Brown could justify this as a further move towards making UK industry more competitive.

Company cars and CO2, page 20

www.hm-treasury.gov.uk

Tax burden record

www.accountancyage.com/Tax/1111931.