Fuel Duty Cut 'Would Create 70,000 Jobs'

Ministers are being urged to cut fuel duty in a bid to help revive the UK economy, ahead of the next planned rise in the tax.

Fuel duty is due to be raised by 3p a litre in January but a study by the National Institute for Economic and Social Research (NIESR) for the campaign group FairFuelUK argues it would be counterproductive.

The report found, by going ahead with the increase, up to 35,000 jobs could be lost and economic growth cut by 0.1% as firms and motorists absorbed the impact.

As a result of the job losses and damage to growth, the tax increase would only bring in just over half the expected extra tax revenue of £1.5bn, the study claimed.

The report suggests that by cutting fuel duty by 3p instead of raising it by 3p would create 70,000 new jobs and boost growth by 0.2%.

The report added the 6p relative difference between the two options would normally have been estimated to have lost the Treasury about £3bn but, because of the boost to the UK economy, that loss of revenue would be much less - at £1.8bn.

FairFuelUK will present the report when its leaders meet Treasury officials in London on Tuesday afternoon.

Speaking ahead of the meeting, FairFuelUK's national spokesman Quentin Willson said: "We have always argued that fuel duty shouldn't be the Treasury's sacred cash cow - it should be used as a lever for growth.

"And we've proved our argument with robust financial research and modelling that shows if you raise duty you destroy jobs and damage growth.

"We appreciate the Government's aspiration to reduce the deficit but know that hiking fuel duty up by 3p in January will only make things much worse."

A Treasury spokesman said: "It is right that the Treasury engages with FairFuelUK to discuss technical issues around the impact of the cost of fuel on the economy.

"What matters to motorists and businesses is that fuel is now 10p a litre lower than under the previous Government's plans. This Government has done more to support motorists and businesses than any other."

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