2011 Budget announces fair fuel stabiliser

Fuel duty cut of 1p per litre also to come into effect

The 2011 Budget set out by the Coalition Government has announced a Fair Fuel Stabiliser can be introduced, which will see the levy on oil production increase from 20 per cent to 32 per cent.

Chancellor of the Exchequer George Osborne stated that the rise in cost of petrol has hit families and businesses and that although British Governments are not in charge of the world's oil price, they are in charge of the duty levied on petrol.

Osborne rejected the suggestion of a separate VAT rate for petrol to offset the previous government's 5p rise that is due to come into place.

Plans announced also include that fuel duty is to be cut by 1p per litre and to delay the inflation rise in duty until next year and to delay the April 2012 inflation rise until the following summer.

Also, the fuel duty escalator that adds an extra 1p on top of inflation every year will be cancelled for the rest of the Parliament.

If the oil price sustains a fall below $75, the escalator will be reintroduced and the new oil tax reduced in proportion.

Further information:
HM Treasury