Hammond hints at £160-a-year fuel tax raid on drivers
PHILIP Hammond faced a backbench revolt last night as he gave his biggest hint yet he could hike fuel duty to pay for extra spending on the NHS.
The Chancellor said he would look again at the benefits of the eight-year freeze on the duty, suggesting it would not be in place ‘forever’.
The tax is currently 57.95p per litre for petrol and diesel. In the last Budget, Mr Hammond said the decision to freeze it would save drivers £160-a-year on average.
But he’s now under pressure to find money to pay for the £20billion-a-year boost for the NHS.
MPs and motoring groups have warned that an attempt to hit drivers would be ‘political suicide’. Tory MPs suggested they could vote against Mr Hammond’s Budget.
In the Commons yesterday, Mr Hammond said the freeze has cost the Exchequer around £46billion compared to what it would have raised with annual increases linked to inflation. He said that keeping the duty unchanged would cost a further £38billion over the rest of the Parliament – twice as much as that spent on NHS nurses and doctors each year.
He said: ‘To support British
Review: Philip Hammond households, the Government has frozen fuel duty for eight successive years, by April 2019 these freezes will have saved the average car driver £850 compared to the pre-2010 escalator and the average van driver over £2,100.
‘But it is important that we remember the other side of this coin, the fuel duty freezes since 2011 have meant the Exchequer has foregone around £46bn in revenues through to 2018/19 – and a further £38bn will be foregone over the budget forecast period as a result of these previously announced freezes.’ However, any move to hike the duty would further penalise motorists and businesses.
Fuel prices have risen recently and prices are now at their highest level for nearly four years. It now costs £70 to fill up a typical family car. Motorists also pay 20 per cent VAT on fuel.
Former Tory minister Robert Halfon asked the Chancellor: ‘The Treasury study in 2014 said that freezing fuel duty benefits the economy to offset almost all the loss of tax to the economy and it said that GDP increased by £4.5billion to £7.5billion over the forthcoming years.
‘Given the recent rise in petrol by 13p and diesel 15p over the past year, does he agree with his own Treasury report that maintaining the fuel duty freeze would benefit the economy and help hardworking people in our country?’
But Mr Hammond said: ‘The analysis that he refers to is from 2014 and obviously that analysis would have to be looked at again in the context of the economy today.’
He added: ‘I do understand that the rise in oil prices and the feed through that that has had to the pump does represent a very real pressure for motorists which of course we will take into account. Many people are dependent on vehicles for everyday living and for work. We take all such matters into account when setting future policy.’
Mr Halfon last night said a fuel duty rise would be a ‘slap in the face’ for voters. He said: ‘It would not just hit motorists, it would hit businesses and food prices and have effect right across our economy.’
He added there were ‘plenty’ of Tory MPs who would vote to block any increase if it was included in the Budget. It is also thought the DUP, which keeps Theresa May in power, would not support a rise.
Before the last Budget, six of the ten DUP MPs wrote to the Chancellor urging him to keep the fuel duty freeze in place.
Howard Cox of campaign group FairFuel UK said: ‘It would be political suicide for the Chancellor to hike duty on the already highest taxed drivers in the world. The freeze in duty has generated jobs, increased GDP, lowered inflation and increased consumer spending. Our supporters want HS2 scrapped, less overseas aid and improved efficiency within the NHS before any more fleecing of hardpressed drivers is considered to help the NHS.’
‘Slap in the face for voters’