Fuel duty rise scrapped

Meat producers and processors have been granted a reprieve from rising costs, with the announcement that the government has scrapped the proposed 2p rise in fuel duty.

The rise, which was announced in by chancellor Alistair Darling in his April budget, was due to come into effect in October. Following months of pressure from consumers and industry, the Chancellor has decided to delay any rise until April 2009.

As a result of the decision, main road fuel duty rates will remain at 50.35 pence per litre after 1 October this year. Consequential planned increases in road fuel gases, biofuel duty rates and rebated oils rates will also be postponed.

Alistair Darling said: "The global credit crunch and sharp rises in world oil prices have pushed up prices at the pump. Today's decision will help motorists and businesses get through what is a difficult time for everyone."

The move will cost the Treasury £500m in lost revenue, but will offer a welcome reprieve for the meat industry in the face of rocketing energy costs and raw material price rises.

The Food and Drink Federation (FDF) has hailed the decision as a "victory for common sense". Since the rise was proposed in April, the FDF has campaigned against it, saying that it would put unnecessary burden on a sector already struggling to absorb rising costs.

Julian Hunt, FDF communications director said: "We welcome the fact that ministers have understood that this duty hike would have inflicted unnecessary pain on an economically vital manufacturing sector.

"We appreciate that environmental concerns were partly behind the proposed hike. But food manufacturers are committed to making a real difference in reducing their environmental impact - and only this week almost 40 FDF members made a public pledge to using fewer and friendlier road transport miles.

"Nevertheless, transport fuel remains a key cost for our members. So the decision to postpone the duty increase is an important signal that government understands it needs to do what it can to help industry navigate through some pretty choppy economic waters."

An NFU spokesperson said: "We welcome today's government decision, which follows intense pressure from the NFU.

"We have been campaigning for several months to get this proposed fuel duty increase scrapped as the UK agricultural industry relies heavily on fuel for the production and distribution of food.

"Today's announcement is also a small but positive step in the battle against agricultural inflation, which has risen dramatically in the last six months.""