Autumn Statement

Chancellor avoids a New Year’s headache and long hangover

AAA welcomes Chancellor's decision to defer January fuel duty hike

AA welcomes Chancellor's decision to defer January fuel duty hike

Chancellor Osborne’s decision to cancel the 1 January fuel duty hike avoids a New Year’s headache and a long hangover for all drivers and is very much welcomed by the AA.

“Big Ben’s chimes ringing in a nearly £2-a-tank hike in petrol and diesel prices would have backfired on the Government and economy,” says Edmund King, the AA’s president.

Cutting back

The AA has told the Chancellor that already 73% of drivers are cutting back on spending, journeys, or both due to the high cost of fuel (AA Populus poll)

In 20 years, UK motoring has cut its fuel consumption by 20% (12.8 billion litres), but contributes 144% more (£15.81 billion) in fuel duty tax.

Drivers in the UK have followed Government advice to purchase more fuel efficient vehicles. It is remarkable that fuel consumption has fallen 20% in two decades. However, drivers are contributing 144% more (£15.81 billion) in fuel duty tax so shouldn’t be stung by another hike in January.

The Treasury may have thought that a fuel duty increase in the winter, when petrol is usually cheaper, would have been easier. But, toasting the New Year with champagne at a lower duty rate than road fuel underlines successive governments’ failure to spot the difference between a luxury and a necessity.

In 20 years, UK motoring has cut its fuel consumption by 20% (12.8 billion litres), but contributes 144% more (£15.81 billion) in fuel duty tax. In the last financial year, The Treasury collected its second highest-ever haul of fuel duty from UK drivers - a whopping £26.8 billion. That is two and a half times more than what is spent on UK roads (£9.8 billion), even before receipts from Vehicle Excise Duty, VAT, company car tax and new car tax are added.

The AA believes that, if the Chancellor wants to beat his record fuel duty haul of £27.26 billion (2010/11), the Government should tackle the inflated pump prices that are driving lower-income motorists off the road and cutting contributions to the Treasury.

Roads

The AA will also be studying details of proposed expenditure on long overdue road schemes but welcomes the announcement of an extra £1bn and four major improvement schemes.

Edmund King, AA President and a Visiting Professor at Newcastle University said “We welcome the extra money for road schemes and in particular a commitment to upgrade the A1 up to Newcastle to motorway standard which will boost the economy of the North East and improve safety.”

Other schemes mentioned are the A30 in Cornwall, M25 upgrade near Thurrock and A5 to the M1.

Fuel duty fact file

Price breakdown of a litre of fuel

Petrol – latest average UK price 133.19p a litre, of which:

  • Duty – 57.95p
  • VAT – 22.20p
  • (Total tax = 80.15 or 60.2%)
  • Wholesale * - 46.65p
  • Margin/transport/etc – 6.39p

Diesel – latest average UK price 141.06p a litre, of which:

  • Duty – 57.95p
  • VAT – 23.51p
  • (Total tax = 81.16 or 57.5%)
  • Wholesale * - 52.69p
  • Margin/transport/etc – 7.21p

(* Wholesale values from 14 days ago to reflect time taken to reach the pump. Source: fuelpricesonline.com)

Impact of 3.02p-a-litre fuel duty increase

  • With VAT, extra cost per litre of petrol or diesel is 3.62p a litre
  • Refuelling a car:
    • small car (50 litres) = + £1.81
    • Mondeo (70 litres) = + £2.53
  • Two-car family extra monthly cost (106.17 ltrs per car) = + £7.69

Fuel duty changes

  • 23 March 2011 – 57.95
  • 1 January 2011 – 58.95
  • 1 October 2010 – 58.19
  • 1 April 2010 – 57.19
  • 1 Sept 2009 - 56.19
  • 1 April 2009 – 54.19
  • 1 December 2008 – 52.35
  • 1 October 2007 – 50.35
  • 2 July 1997 – 40.28

Treasury fuel duty receipts – financial years

  • 2011/12 - £26.80bn from 50.60 billion litres of fuel
  • 2010/11 - £27.26bn from 51.70 billion litres of fuel
  • 2009/10 - £26.20bn from 52.83 billion litres of fuel
  • 2008/9 - £24.62bn from 54.15 billion litres of fuel
  • 2007/8 - £24.91bn from 56.17 billion litres of fuel
  • 1997/8 - £19.46bn from 57.59 billion litres of fuel
  • 1991/2 – £10.99bn from 63.40 billion litres of fuel

(Source: HMRC)


(5 December 2012)

 

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