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Fuel rise could cost 35,000 jobs

The Government's 3p-a-litre rise in fuel duty planned for January could lead to 35,000 job losses, campaigners have claimed.

The rise could also see a 0.1% cut in economic growth, the report prepared for the FairFuelUK group said.

As a result of the job losses and damage to growth, the tax increase will only bring in just over half the expected extra tax revenue - £800 million rather than £1.5 billion, said the report.

Produced by the National Institute for Economic and Social Research, the report said 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 that the 6p relative difference between the two options would normally have been estimated to have lost the Treasury about £3 billion. However, because of the boost to the UK economy, that loss of revenue is much less - at £1.8 billion.

Speaking ahead of a meeting between FairFuelUK and Treasury officials in London on Monday, Quentin Willson, national spokesman for FairFuelUK, said he believed Chief Secretary to the Treasury Danny Alexander understood the problems faced by motorists.

Mr 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.

"Danny Alexander understands this critical point and is one of the few politicians who's actually listening to the facts and engaging with our argument. 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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