Brown is ready to drop petrol tax rise

Allies of the Chancellor said last night he would shelve a rise in fuel duty after world oil prices soared to a 13-year record, forcing UK petrol prices to break the 80p per litre level which led to protests four years ago.

Motorists and hauliers were threatening a fresh round of protests last night, unless the 1.9p per litre rise in fuel duty due in September is cancelled.

Gordon Brown's closest aides said he would hold out for some weeks, but he would cancel the rise rather than threaten economic stability and risk a repeat of the protests that threatened to bring the country to a standstill.

When the fuel protests took place four years ago, Mr Brown resisted the pressure for months but cut 2p off the duty on unleaded petrol in his 2001 Budget and ended the regular rises known as the fuel escalator. "He will wait a couple of weeks but he will drop it," said a close ally of the Chancellor.

Labour MPs joined Tory leaders in calling for the Chancellor to cancel the rise he announced in this year's Budget. Derek Wyatt, the Labour MP for Sittingbourne and Sheppey, said: "I think the Treasury will have to concede."

Fuel protesters, who brought the country close to chaos with their blockade of fuel depots in 2000, said yesterday that a fresh round of protests would be staged, if Mr Brown did not act.

Brynley Williams, 55, the farmer who led protests four years ago, said: "Gordon Brown is playing with dynamite if he goes ahead with the next rise in fuel duty." Mr Williams, who is now a Welsh Assembly member for north Wales, added: "We are asking for parity with the Continent." Motorists reported that diesel had risen to 90.4 per litre yesterday on the M4. Prices were 15p per litre lower in France and Holland, he said.

Ray Holloway, of the Petrol Retailers Association, said about 3p a litre had been added to pump prices since last month, taking the price to 80.2p a litre. He said that, if the crude oil price remained at $40 (£23) a barrel, British consumers would be paying another 3p or 4p a litre before long.

Futures hit $40 a barrel, page 48