Chancellor scraps fuel tax rise

Chancellor George Osborne has announced he will scrap the 3p rise in fuel duty due to come in this August and will freeze the tax for the rest of 2012.

The Treasury explained that the �500m cost of the measure could be afforded as a result of savings made across Whitehall departments.

Speaking in the House of Commons Mr Osborne said fuel duty would now be 10p a litre lower than under plans inherited from Labour.

He told MPs: '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.'

Meanwhile speaking to the Eastern Daily Press after the announcement, economic secretary to the treasury Chloe Smith, also the MP for Norwich North, said further details on how the government would pay to freeze fuel duty to January would be included in the chancellor's autumn statement.

She added: 'The cost of fuel is an essential part of every day life for householders and businesses and the government has recognised concerns about higher prices at the pumps.

'It shows the government recognises what an important thing this is right now. This is a question of cost of living for households and a real cost of doing business for many firms and it's incredibly important the government recognised that and acted.'

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However, Labour claimed credit for the move yesterday saying they had already urged Mr Osborne to scrap the rise using the �500m under-spend in Olympics funding to pay for it.

Shadow chancellor Ed Balls said: 'This is the fastest U-turn in history. Labour called for this help for families and businesses this morning and I welcome the fact the chancellor backed down this afternoon.

'With U-turns on petrol, pasties, caravans, charities and churches, George Osborne's budget is now in tatters.'

But the Treasury insisted Mr Osborne's announcement had been under consideration for some time.

One organisation that welcomed it was rural campaign group the Countryside Alliance, which described it as 'a timely boost for the rural economy'.

Meanwhile the Conservative Broadland MP Keith Simpson said: 'It's not just about how much it costs to fill a tank of fuel, but about helping all those people making deliveries and the cost of that to small businesses.

'In a constituency like mine having a car is not a luxury, it is a necessity. I know the chancellor has been lobbied by many MPs, myself, colleagues in Norfolk, Tories and Lib Dems and certain organisations.

'Rightly the chancellor has said that if he could find the money elsewhere, from savings from other departments then, he would go ahead and it is very welcome.'

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