29.11.2011 Fuel duty rise delayed until August 2012
In his Spending Review, the Chancellor today deferred the 3.02 pence per litre (ppl) fuel duty increase that was due to take effect on 1st January 2012 until August 2012.
The inflation increase that was due for August 2012 will also be cancelled – this was expected to be worth 1.92 ppl. This will mean that there will only be one RPI increase during 2012.
There will also be a 5 ppl discount in fuel duty for our remote islands, the Inner Hebrides, the Northern Isles, the islands in the Clyde and the Isles of Scilly, which will come into force on 1st March 2012.
In August 2012, the duty rate for leaded petrol and compressed natural gas will change by the same monetary amount as the main UK fuel duty, and the duty for aviation fuel and rebated oils will change in proportion to the main rate. The duty differential for LPG will be maintained until 1st August 2012, when it will be reduced by 1 ppl.
There is little doubt that the delayed increase in fuel duty will ease pressure on households and the business sector, especially those dependent on road transport. The AA fuel duty survey suggested that the planned increases would have forced many households to abandon or delay spending on household goods, home improvements and luxury items
By delaying the January 2012 fuel duty increase to August, and removing the proposed August inflation increase, the Government expects to lose out on £375 million worth of tax in 2011/12, rising to a £975 million loss by the end of 2012/13. Expect revenue from fuel duty taxes is now estimated at around £27 billion in 2011/12 (OBR forecast).
Also in the Spending Review: Support for electric vehicles was generally positive – the £5,000 Plug-In Car Grant was not cut, as was feared by some in the industry, and the £30 million Plugged-In Places programme to encourage a recharging infrastructure will be continued in 2012.
The Department of Energy and Climate Change and the Department for Transport will work together to develop links between the take-up of electric vehicles, smart grid technology and the decarbonisation of the electricity generation sector. This will be set out in the next edition of OLEV's Plug-in Vehicle Infrastructure strategy, due in early 2013.
Smart meter rollout starting in 2014 will be completed by 2019, helping customers to reduce the carbon intensity of their energy usage.
Departments will also work to predict the likely demand for electric vehicles and to develop policy for recycling batteries well in time for when the first generation reach their end of life. OLEV and the industry will also work to understand the demands of a smart electricity grid, and to estimate how increased use of electric vehicles will impact upon total electricity demand.
In other areas of transport, it was announced that the increases to Transport for London and regulated rail fares will be limited to RPI plus 1% for one year from January 2012 – a lower increase than some were expecting.
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