Treasury to defer planned increase in fuel duty

George Osborne

George Osborne averted a Tory backbench rebellion in the Commons on Monday when the Treasury gave a powerful hint that the government could defer a planned 3p increase in fuel duty.

A Labour bid to delay the increase until at least April was defeated by 282 votes to 234, a government majority of 48.

Sajid Javid, the economic secretary to the Treasury, won over Tory rebels when he said the government was "determined" to help struggling households. The chancellor could make an announcement in next month's autumn statement.

Javid said: "The government is doing all it can to help hard-working families with the cost of living and putting money back into their pockets. Action on fuel duty is part of this.

"Fuel duty is currently 20% lower in real terms compared to its peak in March 2000 and 7% lower compared to May 2010.

"If we had continued with the policies of the previous government, quite simply prices would be higher, fuel would be 10p more expensive per litre. I know some will call for a further freeze in fuel duty today. I can assure them this government understands the financial pressures hard-working families are facing. Subject to the constraints of the public finances, this government is determined to help families with the cost of living."

Robert Halfon, a backbench Tory campaigner against rising fuel prices, threw his weight behind the government.

"I believe it is perfectly sensible and right to wait for the autumn statement, given the government's record, given that they cut fuel duty last year and given that they have stopped two fuel duty rises," Halfon told MPs.

In a reference to second world war codebreakers, Halfon added: "You don't have to work at Bletchley Park to read the signals that the Treasury is sending out about giving help with the cost of living."

Treasury sources indicated that Osborne would listen to Halfon's demands by describing him as "brilliant". Halfon made clear that he was wary of supporting a Labour motion dreamt up by Ed Balls.

But Cathy Jamieson, the shadow economic secretary, said the government should act as people struggle in the wake of the double-dip recession: "In the here and now petrol is 15p a litre higher than at the general election, it's 5p a litre higher than in the summer, when the government last deferred a rise, and let's remember that the chancellor took that decision following pressure from this side of the house."

Powered by Guardian.co.ukThis article was written by Nicholas Watt, chief political correspondent, for The Guardian on Tuesday 13th November 2012 01.24 Europe/London

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