PM: Fuel-duty cuts ‘were a big decision’

The Prime Minister said an extra £2 billion charge on North Sea oil companies was funding a “multibillion-pound tax cut” for drivers.

Speaking alongside Nick Clegg at a question and answer session with Boots staff in Nottingham, Mr Cameron said reducing petrol duty by 1p per litre and scrapping the fuel escalator meant it would cost £4 less to fill up a family car.

“This is a multibillion-pound tax cut, it is a very big decision that we have taken,” he said. “Of course one would always want to do more.

“But in terms of helping hard-pressed consumers when you think about it they have had their council tax frozen, a million people lifted out of tax, a tax cut for everyone on the basic rate, an increase in pensions in line with earnings, extra tax credits for the poorest in our country and this for everyone who has to use a car.

“I think in what is a difficult year these are good, helpful steps to cope with the year ahead.”

Earlier, the oil industry denied suggestions from Labour that the windfall tax on North Sea activities would be passed on at the pumps.

But it cautioned that the headline-grabbing £2 billion charge would cause cutbacks, including job losses.

Oil and Gas UK chief executive Malcolm Webb told BBC Radio 4’s Today programme: “It won’t affect the consumer at the pump at all.”

There would however be a “depressant” effect on operations, he said - 45% of which involved gas not oil - apparently at odds with Chancellor George Osborne’s efforts to stimulate economic recovery.

The Chancellor said the Government would be “watching like a hawk to make sure that motorists get the benefit of the Budget changes and make sure that there’s no funny business”.

“I’m not pretending that this is going to transform the situation overnight for families who are feeling the squeeze, but it helps,” he told ITV’s Daybreak.

But AA president Edmund King said there were “mixed” signs over whether the fuel duty cut had been passed on at the pumps last night.

“It is always difficult to monitor whether fuel price reductions are passed on to drivers. Motorists often suspect that when global prices increase the garages are quick to pass on the increases at the pumps, but when the oil price falls there is not such a rapid rush to lower pump prices,” he said.

“The AA has called on this Government and the previous government to help the situation by insisting on more transparency in pricing.

“In some countries, such as Australia and the US, the wholesale price of fuel has to be published which helps transparency.”

Mr Clegg and Mr Cameron were at the Boots site in Lenton after the announcement that it will be one of the new enterprise zones.

A handful of people from the crowd of nearly 100 employees were present at the 40-minute question and answer session.

Answering a question on immigration, Mr Cameron raised a laugh from the audience when he said he had been shown some of the questions on the citizenship test.

He said: “It included ‘What exactly is the role of the Mayor of London?’ and I could answer that a lot of different ways, but we won’t go there right now.”

Mr Clegg and Mr Cameron were also asked what they thought life might be like for the average citizen in five years.

Mr Cameron said he hoped people had a “sense of fairness” and that the country was more wealthy and prosperous, but warned that to get there “it is a difficult road that we have to take”.

Mr Clegg echoed the sentiments of the Prime Minister, who called his colleague a “genius” after he began his answer to the final question with the words: “This is a sensitive issue between us but I hope you will be voting in the election in 2015 on a different system ... I thought I’d get that in so he can’t answer and give his side of the story.”