AA
Commenting on the Chancellor’s announcement on the 5p cut in fuel
duty, Edmund King, AA president, says: “The AA welcomes the cut
in fuel duty. However, we are concerned that the benefit will be
lost unless retailers pass it on and reflect a fair price at
the pumps. Average pump prices yesterday hit new records-
despite the fall in wholesale costs.
“The Chancellor has ridden to the rescue of UK families and
businesses who use their vehicles, not for pleasure, but to
function in their daily lives. Since the start of the year, the
20p-a-litre surge in pump prices has been the shock that rocked
the finances of families, and particularly young drivers,
pensioners and lower-income workers who need to commute each day.
“AA research showed that even in November, when petrol pump
prices set new records at around 148p a litre, 43% of drivers
were cutting back on car use, other spending to compensate or
both. That rose to 59% among young drivers and 53% among the
lower-paid. Petrol started this week averaging 167p a litre.
“On top of the duty cut, there has been a substantial reduction
in wholesale road fuel costs feeding through to the forecourts
since 9 March. That needs to drive lower pump prices also. The
road fuel trade shouldn’t leave the Treasury to do the heavy
lifting when cutting motoring costs.”
ends
NOTES TO EDITORS
* The 5p fuel duty cut equates to a saving of £2.75 for a typical
55 litre car tank
RAC
RAC head of policy Nicholas Lyes said: “With petrol and diesel
prices breaking records almost daily, and the cost to fill up a
petrol car at over £92 and a diesel at nearly £100, we’re pleased
to see the Chancellor has given drivers some much-needed relief
at the pumps, but the reality is that a 5p cut in duty is
something of a drop in the ocean. In reality, reducing it by 5p
will only take prices back to where they were just over a week
ago. With the cut taking effect at 6pm tonight drivers will only
notice the difference at the pumps once retailers have bought new
fuel in at the lower rate. There’s also a very real risk
retailers could just absorb some or all of the duty cut
themselves by not lowering their prices. If this proves to be the
case it will be dire for drivers. It also wouldn’t be totally
unexpected based on the biggest retailers not reducing their
prices late last year when the oil price fell sharply.
“Temporarily reducing VAT would have been a more progressive way
of helping drivers as the tax is applied at the point the fuel is
sold, removing any possibility of retailers taking some of the
tax cut themselves to increase their profits. It’s also the case
that the Treasury is benefitting hugely from the high fuel prices
because of greater VAT revenue. The Chancellor is currently
getting 28p a litre VAT on petrol and 30p on diesel – this of
course comes on top of fuel duty as VAT is a tax on a tax.”
