UK Politics

Osborne vows growth boost and hints at fuel duty cut

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Media captionGeorge Osborne: ''I know people feel squeezed''

Chancellor George Osborne has promised economic growth and hinted at fuel duty cuts in a speech to the Tory spring conference in Cardiff.

Just three weeks before the Budget, Mr Osborne, who had also hinted at fuel duty cuts in January, said he knew how much fuel costs were hitting people.

He also announced 10 new enterprise zones in England to boost growth.

Labour said enterprise zones had failed in the 1980s and Mr Osborne "needed a plan for growth, not headlines".

His speech came as trade unionists marched through Cardiff to protest against government cuts.

Members of 50 unions are taking part in the demonstration, with Mark Sewotka of the PCS union and Len McCluskey of Unite leading the group.

'Oil prices'

The government is also facing growing protests about the price of fuel - as international development minister Alan Duncan warned in an interview with the Times that pump prices could double in response to unrest in the Middle East.

The government has already applied to the European Commission to be allowed to cut fuel duty for residents on some British islands.

In his speech, the chancellor sent a clear signal that he will act to stop a planned increase in petrol duty for all UK motorists due in April in his March 23 Budget.

He told party activists: "I know how hard the rises in world oil prices are hurting families in Britain.

"When it costs £1.30 for a litre of petrol, £80 to fill up a family car, I know people are feeling squeezed. And I say to people watching: 'I hear you'."

"We've got another of the Labour Party's pre-planned rises in petrol tax also coming this April - one penny above inflation," Mr Osborne said.

And while he said he would "not take risks with economic stability", he added: "I promise you I am doing everything I can to find a way to help."

Labour's Angela Eagle, the shadow chief secretary to the Treasury, accused the chancellor of having "nothing more than platitudes" for millions of families.

She called on him to help them by reversing the Tory VAT rise on petrol, which has added £1.35 to the cost of filling up a 50-litre tank, and suggested he looked again at the annual duty rise due in April.

"The last Labour government often postponed planned duty increases when world oil prices were rising, as they are now," she said.

"He should rethink his reckless plan to cut too deep and too fast which has sent the economy into reverse with unemployment now rising again and the economy shrinking. And he needs to wake up to the fact that without more jobs and strong economic growth, you can't get the deficit down," she added.

Mr Osborne is under pressure to come up with a strategy to get Britain's economy moving to replace jobs cut from the public sector - and after last month's surprise GDP figures suggested the economy could be tipping back into recession.

'Great potential'

The enterprise zone plan - which will cost £100m over four years - is a scaled down version of one of Margaret Thatcher's most high-profile policies from the 1980s.

They will be established in areas of England that have been hit hard by the economic downturn - mainly in parts of the Midlands and the North.

Firms will be offered reduced business rates, simplified planning rules and less regulation.

He told party activists the zones would be "in parts of Britain that have missed out in the last 10 years".

"They will be centres for new businesses and new jobs where taxes will be even lower and more restrictions on growth removed," he said.

"They will be the places in our land with great potential - but which need that extra push from government and local communities working together."

Earlier enterprise zones set up by the Thatcher and Major governments have been criticised by two reports this week for creating too few jobs at too high a cost, and for providing only a short-term boost.

But ministers claim to have learned lessons from the past, and say they will work in areas with high potential for growth, while working closely with local councils to tailor specific incentives to local needs.

Meanwhile, Bank of England Governor Mervyn King, who will shortly take over bank regulation, has warned that failure to reform the banking sector could result in another financial crisis.

But Mr Osborne said the government was already changing the way the financial system was regulated to "make sure that never again is a bank too big to fail".

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