How could the scrapped 3p fuel duty increase help households?

By Daniel Culpan

Chancellor George Osborne is expected to halt the proposed 3p increase in fuel duty in his autumn statement - news that is likely to come as a big relief for motorists the nation over.

The 3p rise in fuel duty was planned to come into effect in January 2013, but pressure from consumer groups and MPs seems to have led to the move being scrapped. Some have argued that an increase in the cost of fuel would put even more pressure on families who are already struggling to make ends meet.

The current fuel duty rate per litre of unleaded petrol, for example, is 58p - but if the increase had gone ahead, this would have increased to 61p from early next year. Fuel duty is applied to all types of hydrocarbon fuels, including unleaded petrol, diesel, LPG and biodiesel.

In recent years, drivers have been hit with a number of fuel price hikes. In January 2011, there was a 0.76p per litre duty added to unleaded, diesel and LPG fuels, which also came alongside a VAT increase to 20% (from 17.5%). And prices in general have soared in recent years: whereas a litre of unleaded petrol could be found for around 85p in early 2009, the average price today stands at just under £1.35 a litre - adding £25 to the cost of filling a 50-litre tank.

For households getting by on tight budgets, the overall impact of these price rises could deal a big blow to their finances, forcing some into debt in order to cover the cost of travel alone.

A spokesperson for All About Money commented: "Anyone who relies on a car for everyday use, such as getting to and from work or taking the kids to school, should be glad to hear about the scrapped plans to increase fuel duty in January. When many families are already doing all they can to cover their basic living costs, pay down debts and keep a tight rein on the family finances, another price increase could push many families' budgets to breaking point."

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