Mixed reaction to Budget transport announcements

British drivers were spared any new petrol pump price pain in the Budget, but motoring groups warned of further rises to come.

Although Chancellor George Osborne ruled out any fuel duty increases, motorists will still face earlier-announced rises of 1p a litre in October and 0.76p a litre in January 2011.

And with VAT due to rise to 20 per cent in January, new-year pump prices will go up even further. Motorists will also be hit by a rise in insurance premium tax.

The Government has already talked about a fuel stabiliser plan, and now Mr Osborne says there will be an examination of the impact of oil price rises on pump prices.

Also on the transport front, Mr Osborne committed the new Government to a number of projects. These included the upgrade of the Tyne and Wear Metro, the extension of the Manchester Metrolink, the redevelopment of Birmingham New Street train station and improvements to the rail lines to Sheffield and between Liverpool and Leeds.

Professor Stephen Glaister, director of the RAC Foundation, said: "The Chancellor has pledged to keep investing in transport infrastructure and judge capital spending plans on the economic returns they deliver.

"This must be good news for the congested road network, and the 34 million drivers who use it, because highways schemes usually offer better rates of return than those for rail."

He went on: "Drivers know they must pay their fair share of taxes, but the emphasis is on fair and talk of a fuel stabiliser is to be welcomed."

On aviation, Mr Osborne confirmed a pre-election promise to explore ways of replacing the Air Passenger Duty (APD) airport departure tax with a per-plane tax. However, air passengers will still face a previously-announced APD rise in November 2010.

Andy Harrison, chief executive of budget airline EasyJet, said: "Four out of five British travellers would be better off under a per-plane tax as private jets, cargo aircraft and travellers changing planes in Heathrow will start paying their fair share. We applaud the Government's intention to end this daft poll tax on passengers."

Ed Anderson, Chairman of the Airport Operators Association said: "We remain concerned that the Government still intends introducing a per-plane duty but are pleased that they are willing to consult the industry first.

"We will work with the Government to ensure that the impact of a per-plane duty on the viability of routes and regional connectivity will be minimised."

Mr Osborne also announced today that the Government would look at selling off its 49 per cent share in air traffic control company NATS.

Campaign for Better Transport executive director Stephen Joseph said he welcomed the go-ahead for some regional public transport schemes.

But he added that the 25 per cent cuts to most departmental budgets, including transport, would mean hit public transport services and lead to vital road safety and maintenance budgets also being squeezed.

"A lot of the hard choices will now have to take place in the spending review over the summer," Joseph said. "The choices made in the review need to make sure we have 'smarter cuts' that get rid of costly legacy road-building projects and make what we've got work better."

The Freight Transport Association welcomed the Chancellor's pledge to "support the transport links we need to trade our goods." James Hookham, FTA's policy director, said: "FTA is pleased to see the concerns of the logistics sector taken seriously at the heart of the Budget. We welcome the Chancellor's recognition of the sensitivity of transport costs to changing fuel prices at a time when the recovery is still fragile and world oil prices volatile. We need to use this time to commence serious assessment of ways in which taxation of commercial vehicles can be decoupled from private motor cars, possibly through a lorry road user charge for a fuel duty stabiliser.'

The FTA also pointed out that air freight carries 40 per cent by value of UK trade outside of the EU, and said it would participate fully in the proposed consultation on the change to aviation tax. "Any measure which penalises air freight in the UK would run the risk of hurting UK competitiveness in international markets and will be robustly challenged."

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