A leading economist has said choosing to lower fuel duties rather than fund pay for nurses and teachers is "a choice" the Government has decided to make. The comments come as Chancellor Jeremy Hunt announced a freeze on fuel duty in the spring budget.
In March last year, Rishi Sunak announced that instead of the usual annual increase, fuel duty would be cut by 5p to 53p. His predecessor Jeremy Hunt used his spring budget today to further freeze petrol and diesel prices.
He said: “Because inflation remains high, I have decided now is not the right time to uprate fuel duty with inflation or increase the duty. So here’s what I am going to do: for a further 12 months I’m going to maintain the 5p cut and I’m going to freeze fuel duty too. That saves the average driver £100 next year and around £200 since the 5p cut was introduced.”
The money raised from fuel duty tends to increase each year and tends to raise about £28bn a year. When the cut was announced last year, The Treasury said it would cost the public purse around £2.4billion in 2022/23.
Today's decision not to raise the tax and to keep it at its reduced rate has been criticised by Paul Johnson, the director of the Institute for Fiscal Studies (IFS). The IFS is the UK's leading independent economic research institute. Mr Johnson said that the Government's claim it could not find money to fund nurses and teachers was not backed up by its decision to cut fuel duties.
He said: “[I] recall that the Government has spent months saying it can’t find any money to prevent nurses and teachers getting very big pay cuts. He [Jeremy Hunt] just found £6 bn to cut fuel duties. That’s a choice."
He also took to Twitter to criticise the policy. He said: “Not the right time to increase fuel duty with inflation’. It never is! Not undoing the ‘temporary’ 5p cut either.
“But still pretending it will be undone and increased with inflation next year. Absurd. This continued pretence aimed to flatter future public finances is ludicrous.
“Departmental spending still supposed to increase by just 1% a year post-election. That remains a very tough set of plans which are unlikely to be met.”
