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UK Politics

PM: Fuel-duty cuts a big decision

David Cameron insisted the Government was doing all it could to help hard-pressed families today - describing fuel-duty curbs in the Budget as a "very big decision".

The Prime Minister said an extra £2 billion charge on North Sea oil companies was funding a "multibillion-pound tax cut" for drivers.

Speaking alongside Nick Clegg at a question and answer session with Boots staff in Nottingham, Mr Cameron said reducing petrol duty by 1p per litre and scrapping the fuel escalator meant it would cost £4 less to fill up a family car.

"This is a multibillion-pound tax cut, it is a very big decision that we have taken," he said. "Of course one would always want to do more.

"But in terms of helping hard-pressed consumers when you think about it they have had their council tax frozen, a million people lifted out of tax, a tax cut for everyone on the basic rate, an increase in pensions in line with earnings, extra tax credits for the poorest in our country and this for everyone who has to use a car.

"I think in what is a difficult year these are good, helpful steps to cope with the year ahead."

Earlier, the oil industry denied suggestions from Labour that the windfall tax on North Sea activities would be passed on at the pumps.

But it cautioned that the headline-grabbing £2 billion charge would cause cutbacks, including job losses.

Oil and Gas UK chief executive Malcolm Webb told BBC Radio 4's Today programme: "It won't affect the consumer at the pump at all."

There would however be a "depressant" effect on operations, he said - 45% of which involved gas not oil - apparently at odds with Chancellor George Osborne's efforts to stimulate economic recovery.

The Chancellor said the Government would be "watching like a hawk to make sure that motorists get the benefit of the Budget changes and make sure that there's no funny business".

"I'm not pretending that this is going to transform the situation overnight for families who are feeling the squeeze, but it helps," he told ITV's Daybreak.

But AA president Edmund King said there were "mixed" signs over whether the fuel duty cut had been passed on at the pumps last night.

"It is always difficult to monitor whether fuel price reductions are passed on to drivers. Motorists often suspect that when global prices increase the garages are quick to pass on the increases at the pumps, but when the oil price falls there is not such a rapid rush to lower pump prices," he said.

"The AA has called on this Government and the previous government to help the situation by insisting on more transparency in pricing.

"In some countries, such as Australia and the US, the wholesale price of fuel has to be published which helps transparency."

Mr Clegg and Mr Cameron were at the Boots site in Lenton after the announcement that it will be one of the new enterprise zones.

A handful of people from the crowd of nearly 100 employees were present at the 40-minute question and answer session.

Answering a question on immigration, Mr Cameron raised a laugh from the audience when he said he had been shown some of the questions on the citizenship test.

He said: "It included 'What exactly is the role of the Mayor of London?' and I could answer that a lot of different ways, but we won't go there right now."

Mr Clegg and Mr Cameron were also asked what they thought life might be like for the average citizen in five years.

Mr Cameron said he hoped people had a "sense of fairness" and that the country was more wealthy and prosperous, but warned that to get there "it is a difficult road that we have to take".

Mr Clegg echoed the sentiments of the Prime Minister, who called his colleague a "genius" after he began his answer to the final question with the words: "This is a sensitive issue between us but I hope you will be voting in the election in 2015 on a different system ... I thought I'd get that in so he can't answer and give his side of the story."

Business Secretary Vince Cable acknowledged that there was room for manoeuvre on the Government's fiscal strategy.

"There is, as you say, flexibility built into the system," he told BBC Radio 4's The World At One.

"And also it's very important we have the monetary policy that is supporting growth."

But he added: "We see no reason at present to depart from the pathway that we have chosen.

"It's been vindicated not just in the judgment of the main international agencies that are responsible for economic management, it's reflected in the very low interest rates that we are still able to attract because we have a positive rating, and we mustn't lose that."

The Enterprise Zones will add to congestion and hurt, rather than help, local economies, the Campaign for Better Transport group said.

Its chief executive, Stephen Joseph, added: "The last round of Enterprise Zones spurred big, car-based out-of-town retail developments.

"These generated huge traffic jams, added pressure for expensive new roads, sucked the life out of existing town centres and were extremely costly in terms of job creation."

He added that the new zones were "in danger of becoming a planning free-for-all, which would add to congestion and pollution and destroy established high streets".

Mr Joseph went on: "If these new zones repeat the mistakes of the past, we could end up with more out-of-town development that will fail to rebalance the economy or support the kind of jobs we need to compete internationally."