- Fuel duty escalator - above inflation increases to fuel duty - cancelled in 2000 following protests. From then on no automatic increases were added to petrol - they were handled on a budget-by-budget basis.
- Governments have still increased duty on petrol. Yet, this is not as much nor as 'automatic' as it used to be under the escalator system.
- Cons manifesto 2010 promised a 'fair fuel stabiliser'. It was introducedin the March 2012 Budget. What did this mean? Well, it did not mean an end to fuel duty increases. The government can and will increase fuel duty at some point (as of Dec 2012 it stands at around 57p per litre). The 'stabiliser' simply means that when oil prices are high, fuel duty will increase by RPI inflation only. However, if the oil price falls below a set trigger price on a sustainable basis, fuel duty will be increased by RPI plus one pence per litre in each such year. So really it is designed to function when fuel prices are high.
- Oil prices are currently high. HOWEVER, the Chancellor has either postponed or cancelled several fuel duty rises since 2010. Thus the fuel duty stabiliser has not yet been employed. As and when the government do raise the fuel duty THEN the fuel duty stabiliser will be referred to.
- So it is designed to limit fuel duty when oil prices are high and then let fuel duty increase when price of oil is low. Environmentalists argue that this will not disincentivise road use which is what they argue fuel duty should be used for.
Conservative consultation document 2008.
Freight Transport Association document that was published before the autumn statement 2012 (when Osbourne) cancelled the planned 3p rise in fuel duty. Includes good explanation of the fuel duty stabiliser.
Guardian article on the cancellation of aforementioned rise in fuel duty November 2012.
Excellent summary here.
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