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Fuel duty rises

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The latest rise in fuel duty, which sees 2p added to the cost of a litre, has come into effect.

It is the third rise since last December.

The extra duty will see the average price of a litre of unleaded fuel climb to £1.05. Once VAT has been factored in, however, the increase will be 2.3p.

The government has said that fuel duty rise is essential to support ailing public finances, but haulier groups and motoring organisations criticised the additional tax.

Edmund King, the president of the AA, described the timing of the increase, at a period when the economy is emerging from the recession, as “pretty dire”.

The Petrol Retailers Association said that the price of fuel would hit another rise in a few months time as VAT reverts to its old rate of 17.5 per cent at the end of the year.

A spokesman for the organsiation argued that it would have been preferable for the government to defer the increase until 2010.

Petrol prices stood at 85p a litre at the beginning of 2009, but a possible hike in world oil prices could push the cost of fuel higher still.

The Freight Transport Association (FTA) claimed that the latest rise may force some haulage companies out of business.

Jo Tanner, a spokeswoman for the FTA, said: “It is the worst possible time, so for many companies and many drivers it could be the end of the road.” Ms Tanner added that there has been a 50 per cent rise in the number of business insolvencies in the logistics sector.

The increase was announced by the Chancellor in his Budget speech as one of several tax rises aimed at restoring public finances.

Following this latest rise, fuel duty is set to go up by 1p a litre in real terms each year from 2010 to 2013.

Adrian Tink, a motoring strategist at the RAC, commented: “This third fuel duty hike is unacceptable. Since the start of 2009, Britain’s motorists have seen a 23 per cent rise in pump prices, meaning an extra £11 per tank for the average car.”