Osborne faces backbench rebellion over fuel duty

  • @NigelpMorris

George Osborne is facing pressure to veto planned rises in petrol duties amid growing protests from MPs that high fuel prices are hampering the recovery.

The rebellion will come to a head in a debate next week when Tory MPs will demand action to bring down the cost of petrol and diesel. More than 100 MPs of all parties have signed a Commons motion protesting that prices at the pumps are "causing immense difficulties for small and medium-sized enterprises vital to our economic recovery".

The number of backbenchers supporting it has forced the issue on to the floor of the Commons just a fortnight before Mr Osborne delivers his autumn statement on the state of the economy.

Ominously for the Government, public demands for action are also gathering pace: an e-petition calling for the 3p a litre increase in duty due in January to be scrapped has been signed by 110,000 people.

The cost of unleaded has soared by almost 40p per litre since 2007, partly because of increasing oil prices, but also because of higher levies, including the VAT increase to 20 per cent.

The Tory MP for Harlow, Robert Halfon, who has tabled the motion, said: "The cost of petrol is the No 1 issue in my constituency – it is raised morning, noon and night." He said his constituents on average spent almost one-tenth of their incomes on fuel, adding: "It is creating a poverty trap because people can't afford to go to work."

Mr Osborne trimmed fuel duty by 1p in the Budget in March and also cancelled the fuel duty escalator introduced by the previous government. However, his room for further manoeuvre is severely limited by his determination to stick to his deficit reduction programme.

But critics counter that the rising cost of petrol is counterproductive. The AA claims drivers have cut their use of petrol by more than 15 per cent compared with 2008, costing the Treasury almost £1bn in fuel duty in the first six months of 2011.