Daily Mail London
Philip Hammond faced a backbench revolt 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, 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 £20bn-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 Hammond’s Budget.
Hammond said the freeze has cost the Exchequer around £46bn compared to what it would have raised with annual increases linked to inflation. He said that keeping the duty unchanged would cost a further £38bn over the rest of the Parliament – twice as much as that spent on NHS nurses and doctors each year.
He said: “To support 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% 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 £4.5bn to £7.5bn 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 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.”
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