Chancellor George Osborne will raise duty on petrol and diesel when he delivers the Autumn Statement on Wednesday, ,NOV 25 a Cumbrian tax expert predicts.

It would be the first such increase since 2012.

But Dean Johnston, tax partner at the chartered accountant Dodd & Co, believes that falling pump prices have lessened the impact of any increase, making it an option the Chancellor will find hard to resist.

He said: “The Government’s defeat in the Lords over tax credits means that we are expecting an announcement on tax credit changes.

“He’s going to have to lessen the impact and perhaps take longer to get where he wants to be. That means raising revenues elsewhere to make up the shortfall and I would be very surprised if he didn’t put 1p or 2p a litre on fuel duty.

“Some taxes are difficult to collect but fuel duty is collected at source. There’s nothing easier to collect.”

Fuel duty is currently 57.95p a litre. Any increase would hit businesses by adding to transport and distribution costs.

However, RAC data shows that fuel prices have fallen since April 2012, when petrol was 142p a litre on average and diesel 148p. The two are now 104.7p and 110.3p respectively, cheaper than at any time since 2010.

Falling pump prices have contributed to the UK’s negative inflation.

Official figures this week show that inflation was minus 0.1 per cent in October for the second month, well below the Government’s 2.0 per cent target.

Inflation has been close to zero for nine months and is at its lowest since March 1960.

Mr Johnston also believes the Chancellor may be tempted to restrict tax relief on pensions for high earners, and clampdown on bogus “personal service companies” where individuals who are employees form limited companies to avoid tax and National Insurance liabilities.

Meanwhile, the Federation of Small Businesses is hoping that the Chancellor will deliver on promises to reform business rates.

Gary Lovatt, its chairman for Lancashire and Cumbria, said: “The Autumn Statement will be a key opportunity for the Chancellor to reassure business, demonstrating he is aware of the challenges they face.

“Committing to measures on business rates – including extending the soon-to-expire retail relief and the temporary doubling of small business rate relief – will help bring economic certainty. This will allow small business to continue to grow, raise wages and take on new staff.”

The British Chambers of Commerce is calling on Mr Osborne to prioritise spending on infrastructure and measures to boost investment and productivity.

Requests include £1.4bn to clear a backlog in road maintenance, safeguarding rail investment, better broadband, improved support to businesses from HM Revenue and Customs, and protection of science and research budgets.


Rob Johnston Rob Johnston, chief executive of Cumbria Chamber of Commerce, said: “The limited resources at the Chancellor’s disposal should target the structural issues that are holding us back. Given that some areas of expenditure are ring-fenced, the challenge of delivering the remaining £20bn of fiscal consolidation must not be understated.

“It is unacceptable that programmes that do little to boost output are being protected at the expense of capital investment, maintenance of key infrastructure, investment in skills and business access to finance.”