George Osborne, the Chancellor, is under mounting pressure to shelve a 3p a litre rise in fuel duty due to take effect in January.
The Labour Opposition will on Monday table a Commons motion calling for the increase to be postponed until April at a cost of £350m to ease the squeeze on hard-pressed families. It hopes to attract support from Conservative backbenchers, who have been pressing the Chancellor to act.
Although Labour looks unlikely to defeat the Government, its move will be seen as an attempt to grab a share of the credit if Mr Osborne delays the fuel price hike in his autumn statement on December 5.
Ed Balls, the shadow Chancellor, said last night that the money could be found by clamping down on tax avoidance. He cited a growing problem with employment agencies forcing workers to become employees of an umbrella company to limit their tax and national insurance payments while boosting travel and food expenses. These scams are believed to cost the Treasury between £650m and £1bn a year.
Mr Balls said: “Acting now would give some relief to millions of motorists. Petrol now costs an average of £1.36 per litre. That’s 5p higher than in the summer when George Osborne U-turned and agreed to Labour’s call to postpone August’s fuel duty rise. And it’s 15p higher than it was at the general election.”
He added: “Now is not the right time to hit the economy with another tax rise on small firms and people on low and middle incomes. The Government needs to act and clamp down on those avoiding paying their fair share of tax so that millions don’t have to pay more. And I hope MPs from other parties will join us next week in pushing them to do so.”
Today Robert Halfon, the Tory MP who has led demands for a freeze in petrol duty, said the Government should fund the move from the proceeds of the 4G mobile phone spectrum sale. He told the Commons that the auction would raise up to £3bn, more than enough to scrap the fuel duty rise twice over.