Government's 3p-a-litre rise in fuel duty could cost 35,000 jobs campaigners say

The Government’s 3p-a-litre rise on fuel duty could lead to 35,000 job losses in the New Year and stall economic growth, campaigners warned today.

A report prepared for the FairFuelUK group by the National Institute for Economic and Social Research claimed cutting fuel duty by 3p instead of raising it by 3p would create 70,000 new jobs and boost growth by 0.2%.

Instead the Government’s plans could see a 0.1% cut in economic growth and 35,000 job losses, the report said. 

FairFuelUK will present the study when its leaders meet Treasury officials in London tomorrow.

“We have always argued that fuel duty shouldn’t be the Treasury’s sacred cash cow - it should be used as a lever for growth,” said Quentin Willson, from FairFuelUK.

He added: “If you raise duty you destroy jobs and damage growth. We appreciate the Government’s aspiration to reduce the deficit but know that hiking fuel duty up by 3p in January will only make things much worse.”

The report said that as a result of the job losses and damage to growth, the tax increase will only bring in just over half the expected extra tax revenue - £800 million rather than £1.5 billion.

A Treasury spokesman said it was right to discuss “technical issues” around the impact of the cost of fuel on the economy. He added: “What matters to motorists and businesses is that fuel is now 10p a litre lower than under the previous Government’s plans.

“This Government has done more to support motorists and businesses than any other.”