By ACCA's budget team
One of the biggest surprises in this year’s Budget was the announcement that the main fuel duty rates would be cut by 1p per litre from 6pm on 23 March 2011.
An earlier proposed fuel duty rise will now be delayed until 1 January 2012, when it will increase by 3.02 pence per litre. Additionally, the 2012-13 increase in fuel duty will be implemented on 1 August 2012.
Taking a vehicle running on unleaded petrol that averages 35 miles per gallon, or 7.7 miles per litre, where the driver does 30,000 miles per year, the 1p reduction would result in a saving of approximately £39 for the current year.
The Government has also announced it will abolish the fuel duty escalator and replace it with a fair fuel stabiliser.
As a result of the stabiliser, when oil prices are high, fuel duty will increase by Retail Prices Index (RPI) only. However, if the oil price falls below a set trigger price, the Government is committed to increase fuel duty by RPI plus one pence per litre in each such year. The Government believes that a trigger price of $75 per barrel would be appropriate, and will set a final trigger and mechanism after seeking the views of oil and gas companies and motoring groups.