Garages accused of flouting fuel duty cut

25 March 2011

Garages across the UK have been accused of ignoring the 1p fuel duty cut cited in this week's Budget.

On Wednesday Chancellor George Osborne announced fuel duty would be frozen from further hikes and cut by 1p per litre from 6pm that day.

The fuel duty escalator, bought in by the previous government to push costs higher in future years, will be scrapped and replaced with a fair fuel stabiliser.

With the fuel duty escalator, prices were to rise by inflation plus 1p in April. However, the rising cost of fuel due largely to Middle East unrest prompted Osborne to introduce the stabiliser. Under this, oil companies will have to pay more tax in a response to rising global prices. The supplementary charge on oil and gas production will increase to 32% from 20%. This money will pay for the 1p per litre cut on fuel.

But drivers across the country have been complaining that the cut hasn't materialised.

Angry drivers rang newspapers and called radio stations to complain. One post on an internet message board read:

"Fuel prices in my local garage this morning were the same as yesterday - I asked why and was told that prices had gone up and that this had cancelled out the tax drop."

Another read: "So, has anyone noticed the prices at their local garage falling by a penny yet? One of mine is the same as yesterday, the other is up by a penny today."                                      

Andrew Howard, spokesperson for the AA says consumers should bear in mind that wholesale prices are still rising, putting pressure on retailers.

He also says the price fall dictated by the Budget may not have come into effect for many retailers yet: 

"Fuel duty is imposed at the refinery gates," he says. "It wasn't until 6pm on Wednesday that anyone got a penny off anything. If retailers have a weekly delivery it's likely they didn't get the discount on it so we have a degree of sympathy with garage owners. If prices are still the same next week we may have a different opinion."


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