PM hints at U-turn on 2p increase in fuel duty

Published on Thursday 3 July 2008 22:11

GORDON Brown yesterday gave the strongest signal yet that he will abandon the government's planned 2p-a-litre increase in fuel duty, as oil prices hit another record high.

Appearing before MPs, the Prime Minister said the soaring costs provided a "once-in-a-generation opportunity" for the world to end its dependence on fossil fuels.

His latest twice-yearly evidence session with the Commons liaison committee came as the price of a barrel of Brent crude broke the $146 (73) mark for the first time.

Pressed on whether the 2p fuel duty increase due to take effect on 1 October would now be implemented, the Prime Minister pointedly stated that in recent years such increases had often not gone ahead.

And while he insisted that any decision would be for Alistair Darling, the Chancellor, he added: "It is clearly a matter that will be looked at very, very carefully."

Yesterday, in further evidence of the impact of rising fuel costs, it emerged that Macfarlane Transport, a Leeds-based haulier, had ceased trading, putting 300 jobs under threat.

However, Mr Brown rejected claims that lower taxes on fuel in continental Europe had made it impossible for UK hauliers to compete with their overseas rivals. And he said pressure on prices – driven by increased demand from Asia – was likely to continue into the future.

This sentiment was echoed by Hank Paulson, the US treasury secretary, who was in London for talks with ministers and top business figures.

Meanwhile, Lord Howe, a former chancellor, said there would be little a future Conservative government could do to dampen the impact of soaring oil prices on the economy.

He said: "I think we are going to have a very dark economic period. It is going to be rough in many ways and there is not much any single government can do to abate the consequences of that.

"The next Tory government is going to face these difficulties."