Fuel-tax rise prompts new protest threat

Renewed fuel protests like the ones that brought Britain to a virtual standstill in 2000 were threatened yesterday as the Treasury confirmed petrol prices could be increased next month.

Andrew Spence, one of the leaders of the protest that brought together disgruntled farmers and hauliers, yesterday made it clear that blockades had been ruled out against the background of the war in Iraq.

But he said: "If the fuel prices go up we will be looking at more direct action. The haulage industry is in severe decline as it is and fuel-price increases will be just another nail in the coffin."

It is expected that a rise in petrol tax of 1.28p per litre will be announced by the Chancellor, Gordon Brown, to take effect from 1 October.

The Government, however, insists this had been announced in the Budget in April and passed by MPs who backed the Finance Bill to allow inflationary increases to take place. A decision was taken then to defer increases for six months because of the Iraq war and volatile world oil prices.

Experts said the tax increase should not affect motorists too badly, as petrol prices had dropped following the resumption of production in Iraq.

The Tories have branded the increase "another stealth tax", predicting further rises in duty as the Chancellor tries to cut government debt.