Budget 2009: Another fuel price rise? - Auto Trader UK - Features - News and Reviews Hub


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Budget 2009: Another fuel price rise?

Budget 2009: Another fuel price rise? - Feature Image

 

The price of fuel is set to rise again.

We look at the latest trends and talk to industry experts to find out why fuel prices have increased in the 2009 Budget.

Chancellor of the Exchequer Alistair Darling has announced the cost of fuel will rise by 2p per litre in September 2009 and 1p per litre in April 2010.

It will then increase by 1p per litre every year each April, until 2013.

The Chancellor has promised to keep an eye on oil prices.

What happened in 2008?

A 2p rise in the price of fuel was planned for the 2008 Budget. But high oil prices caused the government to postpone the increase.

The price of petrol hit a peak of 134p per litre in April 2008, despite the government’s delayed duty increase.

Find out how to save money on fuel:

How much does fuel cost now?

The average cost of petrol today is 95p per litre, with diesel at 102p.

A 2p per litre rise was brought in on April 1, which added £1 to the average cost of filling up a tank.

This costs motorists an additional £25 per year in fuel duty.

What about the Pre-Budget report?

The cost of VAT (value added tax) was reduced from 17.5 per cent to 15 per cent in November 2008’s Pre-Budget report, cutting the price of all new goods by 2.5 per cent.

However, Alistair Darling has raised petrol prices again to offset this VAT cut – which means fuel won’t cost less at the forecourt.

This is separate from the recent 2p fuel duty increase.

How much will fuel cost in 2010?

The cost of fuel will rise by 2p per litre in September 2009 and 1p per litre in April 2010. This means it'll cost around £1 per litre for petrol and 105p per litre for diesel.

It will then continue to increase by 1p per litre every year each April, until 2013.

There’s annual inflation to consider, plus an extra 0.5p per litre price rise planned.

Depending on the price of oil, this figure could rise further – or fall. Under European law the standard rate of VAT cannot be reduced below 15 per cent, so further reductions may be unlikely.

What do the experts say?

The AA strongly opposed the 2p rise in fuel duty in April 2009, and their attempt to defer the price increase was rejected.

AA president Edmund King said: “These April fuel increases are no joke. It's a shame this and other fuel tax increases will severely dent consumer spending and undermine the UK’s economic recovery.”

The Freight Transport Association said the government aren't helping businesses.

FTA chief executive Theo de Pencier said: “At a time when jobless figures are already sky-rocketing, the government needs to understand such actions will only add to them – and they will be responsible.”

And let’s not forget the motorist. A poll of more than 10,000 AA members last week showed 50 per cent want fuel duty frozen and 31 per cent want it cut.

Philip Gomm, head of external communications for the RAC Foundation opposed the rise: “We appreciate the government is strapped for cash, but they shouldn’t see motorists as the easiest option."

What's your reaction to the 2009 Budget? Have your say on the Auto Trader Blog

Video: Save money on fuel

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