Downing Street have said today that ministers were not informed of the Chancellor's decision to defer the increase in fuel duty at this morning's meeting of the Cabinet, which took place just hours before the announcement. The Prime Minister's official spokesman said:
Tax is a matter for the Chancellor. It should not be unexpected. Since coming to office, this Government has taken time to listen to the concerns of motorists.
This is a significant cost for many families so we have taken action to deal with that cost.
This is a deferral so there is a one-off cost for delivering it. The Treasury has made clear they will be able to find this from within existing spending plans. There is no change in the fiscal stance.
Director of Policy for the Road Haulage Association Jack Semple has said today that he is delighted at the Chancellor's decision to abandon the 3.02p per litre duty increase until 2013 at the earliest.
Mr Semple said: "Today’s announcement will prevent further pressure being applied to the profitability and cash flow of UK hauliers in particular.
"The duty increase would have added £1,200 a year to the cost of running a truck. More widely, the Chancellor’s decision will be welcomed by businesses and consumers across the entire economy”.
Treasury sources have said today that the planned August rise of fuel duty has been deferred until January next year, at a one-off cost to the Exchequer of £550 million.
Sources insisted the announcement was timed for today because it was the last Treasury questions session in the Commons before MPs begin their summer recess next month. One source said:
It is a way of helping families, and businesses as well, with the cost of living. It is a way of recognising that the cost of living is an issue.
John Walker, chairman for the Federation of Small Businesses has said today that the rise in fuel duty would have damaged small companies which were being "crippled by the high cost of petrol".
We would urge the Government to now put a fuel duty stabiliser in place to remove the volatility of fuel prices and help small businesses plan ahead.
Shadow Chancellor Ed Balls has said today that the Chancellor's decision to scrap fuel duty is the "fastest u-turn in history" and was pleased that George Osborne had "backed down" on the plans.
Mr Balls said: “With u-turns on petrol, pasties, caravans, charities and churches, George Osborne's Budget is now in tatters - a truly omni-shambles of a Budget from a part-time Chancellor whose reputation is now badly damaged.
“But we now need to see a u-turn on the tax cut for millionaires and the tax rise on pensioners. And with Britain pushed into a double-dip recession, which means borrowing is now higher than last year, we need a u-turn on this Government's failed economic plan.”
Simon Walker, Director General of the Institute of Directors has responded to the Chancellor’s decision to scrap the 3p increase in fuel duty planned for August, saying that it was "welcome news" for the economy.
In our pre-budget survey, freezing fuel duty was at the top of our members’ wish-lists for improving the UK’s competitiveness, so this is welcome news.
Increasing the cost of making deliveries or of staff getting to work was only going to harm the economy, and many will be relieved that the rise has been cancelled.
The Chancellor has made the right decision, and the wheels of commerce will turn more smoothly as a result.
Quentin Willson, the national spokesman for the FairFuelUK campaign group has said today that the Chancellor's u-turn on a fuel duty increase was "democracy at its best". Mr Willson responded to the announcement:
"The Government has listened and have acted for the good of struggling consumers across the UK. This is democracy at its very best where a Government and a Chancellor can review decisions, and act with fairness and common sense".
British motoring association AA's president Edmund King has welcomed news that plans to increase fuel duty have been scrapped this year.
Mr King said that had the plan gone ahead, it would have siphoned £1.6 million a day from consumer spending into the pump and knocked out a third of price cuts:
This is great news for all motorists as drivers will breathe an enormous sigh of relief with summer holidays about to take off.
A duty increase at the same time as the Olympics would have cast a shadow over the UK.
What we now need more than ever is fuel price transparency to make absolutely sure these benefits are passed on to drivers in their entirety.
The Chancellor told the Commons today that the Government were doing "everything we can" under 'difficult economic circumstances', after scrapping a rise in fuel duty. George Osborne said the fuel duty will now be 10p a litre lower than under the plans inherited from Labour:
We are on the side of working families and businesses and this will fuel our recovery at this very difficult economic time for the world.
The one-off cost of this change will be fully paid for by the larger-than-forecast savings in departmental budgets.