Full fuel duty rise delayed

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The Chancellor took pity on motorists today by introducing his near-3p a litre fuel rise, planned for April 1, in three stages.

With prices at the pumps already approaching record levels, Mr Darling said he wanted to "ease the pressure on family incomes".

He decided that the rise would be 1p in April, with a further 1p rise in October and the final 0.76p increase coming in January 2011.

AA president Edmund King said the phasing in of the rise would "avoid a bad April Fuel's Day Fiasco"

He went on: "Perhaps the thought of 32 million fuming drivers and voters influenced Government thinking."

"Drivers' relief at the Chancellor not raising fuel duty by the full 3p can be measured by the tankful. Had the full increase gone ahead, it would have added £1.50 to the typical cost of refilling a petrol or diesel car, or £37.50 a year.

"For a family with two petrol cars, that alone would have been four times the average increase in council tax for this coming year."

Professor Stephen Glaister, director of the RAC Foundation, said: "At last there is some relief for cash-strapped motorists who over the past year have seen the pump price of unleaded leap by 26.4p to almost record levels.

"With nine out of 10 passenger journeys taking place on the roads, and with 28.5 million cars in Britain, every household in the land has felt some financial pain.

"Drivers spend about 15% of their disposable income on motoring and when it comes to fuel prices, every penny really does count."

Many local roads are now deeply potholed following the severe winter weather. Mr Darling said he was providing £100 million for local authorities to repair roads and £285 million for improvements to motorways, including schemes to allow motorists to drive on the hard shoulder (hard shoulder running) at peak times.

Prof Glaister said the £100 million for local councils would "not go far" and it would need "billions rather than millions spent on maintenance to bring our road network back up to standard".

Under a previously-announced measure, owners of newly-acquired, high-polluting cars will pay a "showroom tax" from next month which will in some cases more than double the amount of their vehicle excise duty (VED) car tax for the first year of their vehicle's life.

For example, owners of the highest-polluting vehicles will have a first year VED rate of £950, while motorists buying the least-polluting new models will not have to pay VED at all for the first year.

Mr King said: "The Government's car-scrappage scheme has had a positive effect but this showroom tax will hit the motor industry."

James Hookham, the Freight Transport Association's policy and communications managing director, said: "For companies struggling to stay afloat, a staggered approach to increasing fuel duty will provide some breathing space.

"However, any increase in fuel duty, which is an unavoidable business cost, is bad news for the economy in the long-term and a staggered approach will delay its inevitably detrimental effects."

Councillor David Sparks, chairman of the Local Government Association's transport and regeneration board, said: "The Government has listened to our call for an extra £100 million to help councils fill in more potholes.

"It is important that road maintenance is sufficiently funded in coming years if we are to avoid lots of potholes in future, and the money announced today is an important start."

It was also announced that there would be a halving in company car tax for ultra-low carbon cars cars for five years from April 2010.

Environmental measures included a second green bus competition to increase the number of low-carbon buses on the roads.

Mr Darling also announced that fuel duty would rise by 1p a litre in real terms on April 1 each year from 2011 to 2014, with these increases expected to save 1.7 million tonnes of CO2 per year by 2014/15.

The "showroom tax" - first announced in 2008 - will mean that cars emitting more than 165gm of CO2 per kilometre will pay more vehicle excise duty (VED) in the first year - with owners of cars emitting more than 255g/k having to fork out £950.

All cars emitting up to 130g/k will pay no VED in the first year.

Campaign for Better Transport director Stephen Joseph said: "Spending on greener transport and fixing roads is welcome, but the real choices will come after the general election.

"Green transport should be the cheapest option for commuters and travellers. But the danger remains that the next Government will continue to hike rail fares while abandoning planned fuel duty increases, thus making motoring cheaper."