Outlook So that went well. The RAC reports that, on average, petrol now costs 2p a litre more than it did before the Budget a fortnight ago, when George Osborne produced his 1p cut in duty with such a flourish. We might give the Chancellor some credit – without the 1p reduction petrol would, of course, be 3p a litre more expensive – but not much: this was a piece of political grandstanding that proved to be an empty gesture in the context of pressures from the oil market.
Worse, the gesture was expensive: the cost of the changes to duty Mr Osborne announced, some £2bn, is to be met from a 12 percentage-point hike in the tax rate paid on North Sea oil production. No company likes being told it will pay more tax, of course, and one always expects some posturing in these cases. Still, the sense of outrage from North Sea producers has been sustained and genuine – and has already resulted in at least two exploration projects being postponed.
The 40,000 jobs the oil industry claims will be lost as a result of the tax rise it has been asked to pay might just about be a price worth paying if Mr Osborne's fuel duty cut had taken some of the financial pressure off hundreds of thousands of stricken families. But that is not how it is working out.Reuse content