THE GUARDIAN

Larry Elliott
Friday September 26, 2003
The Guardian

Gordon Brown came under strong attack last night from motoring organisations and the Conservatives after he agreed to put up petrol duties by more than 6p a gallon next week.

Three years after the government was shaken by nationwide fuel protests, the chancellor risked fresh public anger over rising taxes by lifting the six-month moratorium on excise duty in the middle of what is already shaping up to be a difficult Labour party conference.

The move is likely to push prices at the pump close to 80p a litre, but the decision to defer the increase during the tension leading up to the invasion of Iraq cost Mr Brown £300m in tax revenue at a time when the state finances were deteriorating.

The Treasury said yesterday that the end of the war in Iraq justified the price rise. "Since the Budget, the uncertainty for other regional oil-producing nations has lessened. The volatility of oil prices at the time of the Budget has now diminished and oil prices have become more stable."

As a result, prices will go up by 1.28p a litre next week, equivalent to 1.5p a litre including VAT. Prices were already likely to go up in the coming days following the decision by the oil cartel Opec to cut production by 4%.

Michael Howard, the shadow chancellor, said: "At the time of the Budget, Gordon Brown said he was postponing the increase in petrol tax because oil prices were 'high and volatile'. The oil price is now higher than on the day of the Budget. The oil price on the day of the Budget was $25.30 a barrel. This morning it opened at $26.99 a barrel. Gordon Brown is forcing through a tax rise that will hit millions of people who aren't wealthy and don't have the option of other forms of transport."

AA Motoring Trust spokeswoman Rebecca Rees added: "This is an appalling state of affairs for UK drivers. There is no justification for the rise in fuel duty given that the situation in the Middle East is still extremely volatile, and that volatility was confirmed [on Wednesday] when Opec decided to cut oil production."

RAC Foundation executive director Edmund King said: "The timing of all this is most unfortunate, particularly as drivers have seen few, if any, improvements in transport infrastructure."

The Freight Transport Association said: "We are very disappointed. This, together with the Opec-induced rise, hits the transport industry doubly hard.

"Any increase in fuel duty makes it even harder for UK companies to compete with their European counterparts."

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