Forecourt Trader
Home
Menu

Chancellor's fuel duty cut backfires

01 April, 2011
Page 4 

Chancellor George Osborne's decision to cut fuel duty by 1ppl from 6pm on March 23 has enraged retailers as motorists branded them "greedy" when prices at the pump failed to fall immediately as they had expected.

While the duty cut was welcome, its immediate introduction and the lack of explanation that prices would take some days to be affected while retailers sold through existing duty paid stocks led to confusion at the pumps.

One retailer who emailed RMI Petrol said: "If the people running this country do not understand the basics of retaining profit and the need for understanding the issues and proper communication, that goes a long way to explaining why we are in this mess."

RMI Petrol chairman Brian Madderson, who had advised the government to delay any duty cut until April 1 to allow retailers to sell through their fuel stocks, said: "We are going to make sure the government cops the blame for this bungle. Motorists are not aware that wholesale prices are still going up and retailers are taking the flack but it's the incompetent, insular government and civil servants who are to blame."

Meanwhile, the fuel duty escalator, which would have added 5ppl at the pump this month, will be replaced by a fair fuel stabliser, which will see fuel prices increase by inflation only when oil prices are high. There will also be a change to how the Supplementary Charge on oil and gas production works. As a result of higher oil prices UK oil and gas production is more profitable; the Supplementary Charge will therefore increase to 32%. If the oil price falls below a set trigger price, the government will reduce the charge back towards 20% on a staged and affordable basis while prices remain low.


At a glance

Motoring:

Fuel duty cut by 1ppl from 6pm on March 23

Fuel duty escalator abolished

Fair Fuel Stabiliser introduced

Supplementary Charge on oil and gas production increased to 32%

2011-2012 inflation-only increase in fuel duty deferred to January 1, 2012

2012-2013 increase in fuel duty implemented on August 1,2012

Formal derogation request to European Commission for a fuel duty rebate pilot scheme submitted

Tobacco and alcohol:

Restructure of cigarette duty

2% above inflation increase on tobacco

10% duty increase on hand-rolling tobacco

Additional duty on high-strength beers

Reduced rate of duty on lower-strength beers