Fuel duty - 'There are wide concerns in Labour circles'

ALTHOUGH the government cannot be held to blame for the escalating cost of fuel, the level of fuel duty it rakes in from motorists and commercial vehicle operators remains the highest in Europe.

Alistair Darling's decision to postpone a 2p per litre fuel duty increase from the autumn until next spring – while welcome – will do little to appease the ire of those that are of the opinion that the Government continues to milk road users for every penny it can.

Although Mr Darling was yesterday accused in the Commons of attempting to pull "a rabbit out of the hat" on the eve the crucial Glasgow East by-election, it would be hard to agree with David Cameron's accusation that the timing of the announcement was designed to influence the result. Those living in the east end of Glasgow are far more likely to be influenced by measures dealing with deprivation, unemployment or crime than a short-term concession on already inflated fuel prices.

But the rising cost of driving on the roads is of great concern to the rest of the country at a time when people are struggling due to the credit crunch, spiralling food prices and the prospect of substantial rises in gas and electricity forecast for later this year.

Delaying the increase until next spring will cost the Treasury in the region of £550 million and there are already concerns as to where the shortfall will be made up. While consumers will save almost £1.5m a day due to the postponement of the duty rise there is still great distrust over the Government's taxation policies relating to road users. After first claiming that most drivers would benefit through the changes in Vehicle Excise Duty, due to come into force next April, the Government has been forced into making an embarrassing U-turn, admitting that nine million motorists will be worse off under its plans.

Although it was claimed the changes in the structure were designed to penalise those that drove "gas guzzlers" by making them pay up to £245 more a year, the Government now stands accused of hiding behind green credentials to introduce a stealth tax.

There are even wide concerns in Labour circles that those that stand to be hit hardest are poorer families that own older vehicles that are not as energy efficient as many newer cars and that some who cannot afford the increased tax will be forced to scrap their cars as resale values plummet.

Mr Darling promises that measures to ease the transition will be announced in the autumn. But it remains to be seen whether Labour MPs have the resolve to resist such unpopular policies such as the rises in VED and the spring fuel surcharge. Or will they fall victim to the legislative scrap heap like the abandoned 10p income tax band?