Budget 2012

No freeze in fuel duty - a budget 'blow-out' for drivers

21 March 2012

No freeze in fuel duty - a budget 'blow-out' for drivers

No freeze in fuel duty - a budget 'blow-out' for drivers

The Chancellor’s decision to increase fuel duty in August was described as a “Budget Blow-Out” by the AA, whose research shows such increases will force two thirds of drivers out of their cars for some journeys.

For almost one fifth of drivers these increases will hit their food budget as 18% of all drivers will have to cut back on grocery shopping.

Comment

Edmund King, AA president, said: “At a time of record prices at the pumps the August increase in duty is a budget blow-out which will force drivers off the road and could bring a summer of discontent for many.

At a time of record prices at the pumps the August increase in duty is a budget blow-out which will force drivers off the road and could bring a summer of discontent for many

Edmund King, AA president

“We have heard much about tax allowances but the increase in fuel duty makes no allowance for car-dependent, rural and disabled drivers. Only last week the Prime Minister told American students that UK fuel prices would make them “faint”, yet the Government seems intent on inflicting more pain for no gain on drivers. Ironically,  such a hike in duty doesn’t necessarily help government finances as people will cut spending at the pumps and in shops, and it could fuel inflation.

“We welcome the recognition that new investment is needed in the road infrastructure but are not convinced that the water industries offer a good precedent to follow. New river crossings in east London are much needed to reduce congestion and improve accessibility.”

VED

Vehicle Excise Duty rates increase in line with inflation.

Road Investment

The Chancellor mentioned private investment in roads learning the lessons from the water companies. He also said we will be exploring new river crossings in east London.

Fuel price hard facts

Fuel duty on petrol and diesel was scheduled to increase by 3.02p on 1 August 2012. With VAT added, pump prices will rise 3.62p a litre.

Impacts:

  • A typical 50-litre petrol refill will cost £1.81 more.
  • Filling an 80-litre commercial van tank will cost £2.90 more.
  • The monthly petrol bill for a two-car family will go up by £7.69
  • With the UK retailing 50.0 million litres of petrol and 45.9 million litres of diesel a day (DECC volumes for Q3 2011 divided by 92 days), the Treasury will from August gain an extra £3.47 million a day.

At today’s price, 139.67p a litre, the cost of a litre of petrol breaks down into: 57.95p fuel duty, 23.28 VAT (total tax – 81.19p or 58.2%), 52p wholesale, 1.5p biofuel content, 4.94p retailer’s margin, transport costs, admin.

Since March 2010, the price of petrol has risen 23.24p a litre or 19.9%. For a family with two petrol cars, the monthly fuel bill has risen £49.35

Since March 2011, the price of petrol has risen 6.5p a litre or 4.8%. For a family with two petrol cars, the monthly fuel bill has risen £13.87

Budget day fuel prices

  • 23 March 2011: petrol 133.53, diesel 140.26
  • 22 June 2010 (Coalition budget): petrol 118.21, diesel 120.70
  • 24 March 2010: petrol 117.45, diesel 118.13
  • 22 April 2009: petrol 95.69, diesel 102.99
  • 12 March 2008: petrol 106.45, diesel 113.40
  • 21 March 2007: petrol 89.77, diesel 92.92

(Updated 22 March 2012)