Budget 2010 - fuel tax rise confirmed

Chancellor of the exchequer Alistair Darling has announced a phased introduction of a 3p per litre rise in fuel duty in his Budget speech.

Today’s Budget from Alistair Darling - described by the BBC as 'possibly his last as chancellor' - has brought few surprises for motorists, but little welcome news either.

Hilton Holloway blog - Motorists avoid a Budget kicking - for now

The 3p per litre rise in fuel duty, which could add more than £2 to the cost of refilling a large car, will be phased, so you won’t see much of the price increase at the pump until after the general election, likely to be held on 6 May.

Duty will rise by a penny in April, a penny in October, and once more before at the beginning of 2011.

Darling also confirmed fuel duty will continue to increase again as planned from 2014, according to the fuel price escalator.

Responding to the rise, Professor Stephen Glaister, director of the RAC Foundation, said: "At last there is some relief for cash-strapped motorists who over the past year have seen the pump price of unleaded leap by 26.4p to almost record levels.

"With nine out of ten passenger journeys taking place on the roads, and with 28.5 million cars in Britain, every household in the land has felt some financial pain. Drivers spend about 15% of their disposable income on motoring and when it comes to fuel prices, every penny really does count."

Fuel tax currently provides the government with around £25 billion a year, and Treasury officials claim that the real cost of fuel is less than ten years ago.

Pressure groups had been calling for the planned rise to be scrapped, but Darling needs to raise money as the government is expected to borrow around £167bn this financial year.

Darling also announced that £100million will be made available to local authorities to repair potholes on local roads caused by the recent bad weather. However, the Asphalt Industry Alliance says the shortfall in funding for roads England and Wales was more than £850 million in 2009.

He added that £285 million will be made available for improvements to the motorway network, including the introduction of more hard shoulder running schemes.

The chancellor also confirmed that options for the sale of Dartford River crossing are being finalised. It has been speculated that a new owner could raise toll prices.

Opening his speech, Darling provided an overview of the state of the economy. Included in his round up of successes he mentioned scrappage, which he says has helped car sales rise 30 per cent year on year.