Philip Webster, Political Editor
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Huge rises in road and petrol taxes for millions of motorists could be scrapped after two Cabinet ministers hinted at another U-turn in government policy.
After warnings from MPs that the party was alienating ordinary voters, Jack Straw and John Hutton suggested that the Pre-Budget report in the autumn would contain changes to plans set out by the Chancellor in March.
But, in a further sign of government confusion, Downing Street and the Treasury insisted that no plans were being considered to revise the vehicle excise duty changes announced in the Budget. Both were swift to rule out suggestions of another mini-budget similar to the £2.7 billion package announced a fortnight ago to ease the impact of the abolition of the 10p tax-rate.
Mr Hutton and Mr Straw appeared to have taken No 10 and the Treasury by surprise, suggesting that changes to plans that have alarmed Labour MPs might come in this autumn’s Pre-Budget Report.
The MPs want Mr Darling to scrap plans, revealed in The Times this month, to make a new £200 charge on high-emission cars applicable to vehicles bought since 2001 because it would amount to retrospective taxation of drivers.
Mr Darling and the Prime Minister were cautious because any change of the sort demanded by Labour MPs would cost up to £2 billion, money the Government does not have at its immediate disposal.
The £2.7 billion tax package last month was paid for directly by borrowing and a senior official said last night: “We can’t do that again. Money does not grow on trees.”
Even so, it is clear that changes will be made as the Government tries to appease backbenchers and address their concerns over the changes that are hitting the middle classes. Mr Darling has agreed to meet Labour MPs next week.
As hauliers protested in London and Wales, expectations were growing that Mr Darling will not go ahead with the 2p per litre rise in fuel duty due in October.
In France, President Sarkozy responded to blockades by fishermen protesting at fuel prices by calling on the European Union to suspend part of the VAT levied on fuel in response to rising oil prices. His proposal was swiftly slapped down by the European Commission and was met with little enthusiam in No 10.
The interventions by Mr Hutton and Mr Straw stoked expectations of a U-turn for which the Treasury and No 10 did not seem to be ready. An official said: “It would be wrong to suggest anything is being considered or that anything is imminent.”
Asked in a BBC interview about the retrospective element of the changes to excise duty, Mr Hutton, the Business Secretary, said: “I think we should wait and see on that. The Chancellor is listening to what people are saying about vehicle excise duty, as he has done on a number of occasions about tax rises.” Mr Straw, the Justice Secretary, went further, suggesting that changes were imminent. He said that the vehicle excise duty change would not come into effect until next April, adding that Mr Brown and Mr Darling were “listening to public concerns”.
Officials said last night that the changes on road tax announced in the Budget in March would not appear until next year’s Finance Bill, leaving plenty of time for discussion. “The biggest thing we would have to decide is whether we have the money, and where it would come from,” one said.
MPs are concerned because many of the cars affected by the tax change are popular family models, such as the Renault Espace and Vauxhall Zafira.
Last night’s confusion underlined Mr Brown’s problems with Labour MPs worried about losing their seats. Brian Iddon, MP for Bolton South East, said: “I’m getting complaints from our core Labour vote that they feel the Labour Government is just hitting them left, right and centre. They are heavily bruised at the moment.”
Dr Iddon cited the ban on smoking in public places and rising alcohol and food prices as other causes of anger.
George Osborne, the Shadow Chancellor, claimed that poorer families with older cars would be hit hardest. He added: “Everyone knows that Alistair Darling and Gordon Brown will be forced into a U-turn on this issue, as they have on so many other tax changes. So why put off today what they will have to do tomorrow?”
Money Central: Ten easy ways to drive down your petrol costs
I am sick of this government charging me extra taxes in the name of saving the world. Would it not be better for the government to take to task the companies that produce the cars and force them to only produce cars that are within european guidelines for emmissions?
Roy, Leighton Buzzard, UK
I am just waiting for fresh air tax. We have to breathe it, we have no choice, just think how much it would raise the government. Thank heavens for spin they will find an excuse as to why it would help us all be greener and we would have no alternative sounds right up labours' street.
A.Green, Manchester, England
Or in my case, Colin, to quit my job. So then the government would have to pay my income support instead (as I would be eligible, since I'm a -badly paid- contractor).
M.R., Stockport,
This government has totally lost the plot. Labour voters were leaving the party in droves prior to the mess involving excise duty and the prices at the pumps. At least MP Dr Iddon has mentioned the main reason why labour voters are defecting - the smoking ban. Is the penny finally dropping?
Helen, Wigan, UK
Unfortunately for Brown, the effects of recent events and past decisions are now running away from him and his charade of serene calmness is looking both disingenuous and rather absurd. Like a swan on a stormy lake, everyone has begun to see the crazed paddling going on underneath the water.
Andy Fleming, Liverpool, UK
Perhaps if Gordon Brown hadn't spent ten years wasting vast amounts of his tax income then there would be some flexibility in the Government finances.
The Government could easily cut 5% from the budget this year if it wanted to. But it seems Government largesse must be protected at all costs.
John, Bournemouth, UK
Brian Iddon, MP for Bolton South East is listening and I hope that Gordon Brown is listening to him and the voters. If Brown wants the millions of votes back that they have lost, he must do something about this tax and make SOME exemptions to the smoking ban.
Chas, suffolk, England
As further illustration of the government's rip-off of the motorist, The Times reported in December 2007 that in 2006 the government collected £45 billion from the motorist, and spent only £7.5 billion on roads. The remaining £37.5 billion was used for what, exactly?
Adrian Ryan, Donegal, Ireland
GB says the oil ossue is not a simple matter. Yes it is, reduce the duty so we pay the same as before the price rise. Fix it at a given figure rarther than a %, and reduce the VAT on fuel to 5%, the same as gas and electricity. Job done.
Ron, Milton Keynes, Bucks
No doubt there indeed will be a u-turn, as the phased introduction of the road fund tax increases will co-inside with holding of the next general election.
Rod Jackson, Glen Vine,
Don't businesses get to offset the VAT they pay on fuel against the VAT they collect from thier customers? So the only impact on them is the additional fuel duty they pay. It's Mr & Mrs Average Driver that suffer most, still I suppose it helps us serfs to know our place in the kingdom.
Ron, Milton Keynes, UK
They (GORDO) want YOUR money. They would like to have ALL your money. They would dearly love to then spend it on their pet projects, social engineering and incredibly wasteful ministerial initiatives. Slowly the worm is turning however. The electorate has awoken. Labour is dead for a long time.
David Nammory, Liverpool,
When you live the pampered lifestyle of ministers, chauffered limos, grace and favour mansions, subsidized second homes on tax free allowances, flying first class everywhere, you simply lose touch with reality and become delusional. This gang has done it in spades.
William Thomson, Guildford, UK
So it appears the government are set for another U-turn after realising they have got it wrong (yet again). Why stop now?
Brown should do the biggest U-turn and call a general election.
Paul, West Midlands,
"Money doesn't grow on trees..."
Unless it's £100bn to appease Labour voters in the North East (Northern Rock), £2.7bn to fail to buy a by-election, £5bn to waste on selling our gold stocks, and Lord knows how many billions of pounds are squandered by Labour quangos, consultants and agencies.
Ian, London, UK
I thought that the rationale for additional vehicle excise duty on high emission cars was to encourage us to be more environmentally responsible. Or is it now OK to pollute the atmosphere excessively as long as you drive a 'popular family model' such as the people carriers mentioned?
Mark Sanderson, Milton Keynes,
The years of waste, the plethora of committees and subcommittees, review after review and knee deep in quangos have finally caught up with Nulabour. The Country is as bankrupt as the Government is of common sense. Many billions have been squandered. How can you sleep Nulabour?
Roger, Surrey.,
The 'I want, therefore I am' great British public have not 'signed up' to carbon reduction and any attempt by government to separate them from their beloved 'smokers' is a guaranteed vote loser. But the retrospective imposition of road tax increases is yet another shot in a badly holed foot.
Kevin, Leeds,
Labour has done what Labour has always done..... wasted our money and charged us for it. They need to be removed from government (again).
Anthony, London,
So this is the team of all the talents as promised by Brown.
I wonder if there will be anything left of this country in 2 years time when we get a chance to say who runs us?
Bill, Knaresborough, UK
We need an overhall of the socail security system, dont work for 18months lose all benifits! On top of that let the banking sector pay its own way out of trouble! Trust me they can afford it! And stop pretending these taxes have any thing to do with the environment. Labour out!
Dean, Southampton, England
Oliver from Darlington!
I'm sorry but that is just a step too far. Give up the booze? We need it with this government!
Rob, Manchester,
Why not scrap car tax altogether and put in on the petrol? That way, those who do the most miles pay the most and it would be an obvious incentive to reduce mileage and/or engine size.
Colin Sandall, Sturminster Newton, UK
Why keep going on about "U turns" ? If it helps the public, then please, please let them do as many rotations as they need. perhaps we could call it a "Policy Correction'
Hamad Lone, London, England
Good luck to the lorry drivers. If they get what they want maybe we can all learn from them that the only way to make this government listen is to protest in a massive way.
Look at the French, they love a good protest - and now Sarkozy listens and suggests a cut in fuel tax Europewide.
Rob, Manchester,
A number of people have commented on how we can get the government to take notice of the normal people. Why not organise ourselves, and tell Brown and Darling we will reduce your tax take by £1 billion if you do not reduce the fuel tax. Everyone to stop purchasing alcohol from the first of July.
Oliver, Darlington, England
Brown and cabinet members are quick to reassure us that they are "listening to our concerns" and "learning". Also that Brown is the best man to lead us out of this economic mess he got us into. We don't need more words - just ACTION! Reduce the tax or get out.
JohnM, Perth, Scotland
If everyone refuses to re-new their car tax, when due, until the proposed rises are dropped that would force the issue.
There is no way that the courts could cope with prosecuting everyone and the prisons are already full.
Chris, West Mersea, UK
The goverment should consider this as a road tax option...
Cars upto 1500cc £80-00p per year RT with no exceptions.
1501cc to 2500 cc £160-00p per year RT.
2501cc and above £240-00p per year RT.
FAIR AND SIMPLE !!
KEN SANTI, SEDGEFIELD, DURHAM
It doesn't require genius to realize that increasing fuel tax is a gold plated guarantee for higher inflation and prices. Even the Prime Minister and Chancellor must be aware of that which must mean the state of the Country's finances are worse than many thought.
Simon Marshland, Bath, UK
By all means impose the increased tax bands on NEW cars but not retrospectively.
Mike, Gravesend, England
There may be disagreements between the parties on this tax but no doubt that all will be of the same opinion when the talks start on their proposed salary increase
stanley, Haifa,
Britain should have scrapped excessive taxes on automobiles BEFORE it lost its automobile industry to the germans...
The automobile industry may have of two uses: Either creating wealth and production OR raising taxes. It's a question of choice.
Rui, Lisbon, Portugal
The budget was based on 80p a litre on petrol. Now it is about 115p.That means the government got more than 6p a litre on VAT alone.Forget the other taxes on the difference in profit from corporation tax and others. When they say they will postpone the 2p tax on petrol, they already got more than 6p
Chris, blackburn, uk
The incompetence of the NuLabour Government is close to criminal. Call an election now or face prosecution for fraud on the public when they are thrown out of office - Can't we at least stop them getting their overly generous pensions and perks?
Richard, Kiev, Ukraine
'Alienating Ordinary Voters'!!! Who are they. No MP recognises ordinary voters. They only look after themselves.
louis blanc, Liverpool, UK
The tax on fuel and road tax is not a 'green' tax it is mearly an easy way to raise revenue.
It's about time Mr Brown stood up for the public and not continually support the dubious claims of the 'green' element
Mike, Gravesend, England
The quote "money doesnt grow on trees" is going to haunt the poor devil who said it for the rest of his life!
As someone said to me yesterday "Replace the word 'green' in any announcement with 'tax raising'!
BG (one of the trees)
Bill Glanvill, Horsham, England
Bernard, Edinburgh, re. extra tax take from VAT:
At 85p/litre(price last year) the VAT take was 12.5p/litre. At 120p/litre the take is 18p/litre, an increase of 5.5p/litre. Fuel sold in a year: c. 55 billion litres. Therefore extra tax take from VAT alone £3 billion.
John Watt, Edinburgh, Scotland
If the whole of the UK (to a person) stayed at home for a week and did not go out, did not use their cars, imagine how much the Govt coffers would lose in tax. Maybe then they would start to listen - Hit them where it hurts, in their pockets! not ours for a change. Let them know it's a tax too far!
M Cooper, Xcurch,
This tax is unjust and foolish. It simply has not been well thought out. Even if the taxation of high CO2 emitting cars were justified, why would anyone implement this measure retrospectively and in arbitrary steps.
Why should 224g emittting car pay £210 and 226g emitting car pay £440?
A Akademir, Herts, uk
Now truckers are blockading we should all join in and support them, for too long the motorists have been the bottomless money pit for the Government.
Lets make our voices heard, and all get up off our backsides and do something instead of always moaning.
Simon, Derbys,
The Govt given Northern Rock £100 bill plus a month ago £50billions with open door to £200billion = £300 billions since October last yr. We give £12 Billion a Yr X over 13 yrs = £150billions to the EU 95% unaccounted for. Given £10bill 4 African Education, most will go to dictators? Incompetent
Jas , Alders, UK
"Money does not grow on trees.
Except when it comes to the £23,000 grant that MPs want for themselves.
Or the 15% pay rise that MPs were pressing for, as reported in The Times.
Or the one-off £200 council tax bribe for pensioners to get Labour through the 2005 election - remember that one?
Sean, Surrey, UK
How about the government leading the way they should be?
Rather than pulling U-Turns and constantly changing their mind for fear of public opinion, they stick to their guns and lead this country.
People don't knows whats best for them, and if Brown will let the people decide-he might as well resign.
Elizabeth, Edinburgh,
"man there is a sucker born everyday" - Alexander Marra, London, England
Agree.
Jeremy Clarkson for PM!
Pete, Cov,
Incompetence will out !
The govt are really struggling with the economy, but they have no understanding of an individual's budget and the flow-on effect to the overall economy. All these extra taxes reduce disposable income, and the retail and other sectors will continue to take a battering.
Padraig, Perth, Australia
why does britain have to the world lead on so called green issues,gordon brown can not ever lead britain into a
referendom on the E.U.
when the U.S china india & russia are not bothered. Take a back seat gordon no one is listening
albert drinkwater, luton, breat britain
"money doesn't grow on trees". l hope the Tories use that quote for their Election campaign. Now!. Not in 2010!!!!. For God's sake we must get these lunatics out asap!!!!. Petition?.
How can we all unite and make this clear?
Beverley, Bilston, England
The money that grows on trees for this thieving fascist government is being squandered on over generous pensions to civil servants and inefficiency such as a much too complicated tax system and the benefits fiasco that could be simplified by reducing tax rates instead.
Babis, London, UK
Having read the article I can't help but wonder why we are paying more in taxes these days but receiving less in services!! NHS on its knees, less police officers, worse roads and so on, where is all the money going??. Maybe the goverment should give less to spongers!!! and look after the workers!!!
KEN SANTI, SEDGEFIELD, DURHAM
Scrapping the planned increase in fuel duty in October is not the same as reducing fuel tax. We know that 70% of the price of petrol is tax and is a higher % than other EU countries pay. Gordon can blame oil producers for the increase in prices but we know the Govt could reduce prices today.
Donna Walker, Effingham, England
The privileged who have a second home funded by the taxpayer, or an official home & car, DO get of touch. However, we all must learn that it is our money that we encourage the State to spend. If we want not to pay so much tax, expenditure must be cut back. There IS a limit to taxing and spending.
Dick, Chesterfield,
The biggest thing we would have to decide is whether we have the money, and where it would come from. This is a proposed tax rise, for heaven's sake, not a cut. If they can't afford NOT to raise taxes, they're either overspending already or mismanaging the ample funds at their disposal. Enough!
Roger, Arese, Italy
it's funny how they found so much money to prop up failing Northern Rock though... how much was that again???
paulc, gloucester,
my friend was trying to convince me that the extra 2p on petrol was to save the environment and that the UK government, unlike the US, cares about green policies. man there is a sucker born everyday
Alexander Marra, London, England
As a motorist, I'm sick and tired of being the target of central governments (over)spending plans, every local authoritys funding schemes and every police authoritys' desperation to claw in revenue for new speed cameras.
In the 21st century is the car now to be considered an unaffordable luxury ?
Tim Little, Folkestone, England
They can't afford to help out the taxpayers because they need to pay for the plethora of useless beurocracies and initiatives. When you're about £1.3 trillion in debt, it's not easy to fund a tax cut don't you know?.... unless there's a by-election coming up of course ;).
Tom Phillips, Liverpool, UK
The EU is planning to level excise duties on fuel throughout the EU in 2014, so Labour, if it was lucky enough to still be in power, would face a 20% reduction then as ordered by the bosses in Brussels. Time for the Tories to sort out the Labour mess again, or perhaps another Party on the rise?
B J Deller, Marbella, Spain
voters have become aware at last ,at the way they have been robbed by Gorden Brown over the last 11 years. Tax will have to be reduced. billoins of pounds we spend on aid and imigration reduced billions of pounds in waste will have to be cut out .MPs gravy train will have to be stopped i could go on
c hooks, lincolnshire,
No, money does not grow on trees - it grows on taxpayers. At least that's the attitude that Labour has had for the past 11 years, treating the electorate as a limitless supply of funds for them to waste and squander.
Chris K, Cheltenham, UK
We would have an extra few Billion pounds if Labour had not capitulated at the last EU budget conference...Labour rely on our short memories to get away with such acts.
Adrian, aldershot, ENGLAND
The real point here is that if the government fail to raise the money they need from higher vehicle excise licences and fuel duty then they are going to have to raise it in other ways. After all the working people of the UK have to pay for the total wastage of this incompetent lot.
John MOORE, Paphos, Cyprus
This is a malfeasant Government and Labour Party. Brown's claim that fuel rises are due to OPEc and and the oil price rather than his tax increases beggars belief. These professional public sector hangers-on live in a parallel universe and must be despatched down to the the last MP scrounger.
Steve, London,
If the Brown administration cannot stop dithering it should get out and make way fro a fresh Government that will get on decisively with what nees to be done. The nation looks to them for leadership not confused unattributable briefings to the media.
James Elliott, Eastbourne, UK
If Gordon Brown wants to remain Prime Minister I don't think he has any choice but to reduce fuel duty.He has the power to do this but he must remember that the Brisish public have to power to remove him from power at the next election.The people are his boss.
stephen hulton, eure, france
Everybody knows that Boris Johnson is being used as a forerunner for Tory policies. What "Ken's" party have failed to realise is that Ken Livingstone has been perceived to be doing the same for Labour. Goodbye Ken . Goodbye Gordon
Adrian, London,
Has anybody in this government got a clue what is going on. Enough is enough ,they should call an election, because it is clearly time for a change. None of the cabinet are fit for purpose.
Egor, swindon,
The government is currently enjoying in the order of £1.2 billion a year extra VAT from the increase in oil pices above the projected income from fuel duty and VAT.
That is the next best thing to growing money on trees. Every price increase gives more VAT to the Treasury. Where does it all go?
Bernard, Edinburgh, Scotland
"Money does not grow on trees".
But it does. Every increase in oil prices results in a windfall for HMG in terms of VAT and Excise Duty. This should be given back by reducing the overall tax-take, which in itself is inequitable by taxing a tax!
M G Ives, York, UK
The lack of ministerial talent available to Brown is really starting to show.
Andrew Milner, Karuizawa, Japan
"Money does not grow on trees". Oh, really. So where are *we* supposed to get it from ?
D Murphy, Skipton,
The fact that No 10 and the Treasury are denying any revision to their vehicle taxation plans may be, to Labour MP's, somewhat academic . It is quite feasible, again to Labour MP's, that neither the Prime Minister or the Chancellor will be in any position to influence events within a few weeks.
Bob Fanton, Fordingbridge, uk