Conservatives pledge 'fuel stabiliser'

By Andrew Porter, Political Editor
Last Updated: 6:27AM BST 07/07/2008

Duty on fuel would be lowered when oil prices are high and raised when they fall to give a fairer deal to motorists, under Conservative plans.
A "fair fuel stabiliser" is the Tory answer to rising costs of living and would enable the Government to reduce the pain of increases while "sharing the gain" when oil prices fall.
George Osborne, the shadow chancellor, claimed that if his plans had been introduced in the last Budget, motorists would now be paying 5p a litre less for petrol.
Mr Osborne said: "We need a totally different approach to fuel duty where government helps families instead of harming them.

"With duty rising when oil prices fall, we would be putting something aside in the good years to help in difficult times."
The Treasury denounced the plans as "gambling with public finances". However, Edmund King, the AA's president, broadly welcomed them, saying his organisation had suggested a similar system to the Chancellor in January.
Mr King said: "Record pump prices and high levels of excise duty are affecting the mobility of millions. The Government needs to review fuel duty as the price of a barrel of oil has doubled in just 12 months."
Kitty Ussher, the Treasury minister, said: “If George Osborne were to do this, he would need to raise nearly another £3 billion in taxes elsewhere to plug his tax gap — that’s getting close to an increase of 1p in basic income tax.
“This is on top of the £10 billion of unfunded spending commitments he has already made. His proposal is a dishonest gimmick that would either mean the Tories would have to hike up taxes somewhere else or leave a massive hole in the public finances.”
Vince Cable, the Liberal Democrat Treasury spokesman, also poured scorn on the proposals. He said: “Mr Osborne is presuming a knowledge of future trends in oil prices not shared by most people who look at these things professionally.”
The Conservatives’ plan would take Treasury predictions for oil prices as a “base” — and fuel duty would then be altered if they subsequently proved to be wrong.
Alistair Darling, the Chancellor, predicted in the Budget that a barrel of oil would cost about $84 per barrel, but it has since risen to more than $140.
Mr Osborne insisted that the system would be cost-neutral. He also contrasted the proposals, which are being put out for consultation, with the Government’s 2p increase in fuel duty, scheduled for October.
However, both Gordon Brown and Mr Darling, have been dropping heavy hints that the 2p rise will again be frozen, as it was in March.