Fuel Price Escalator

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The Fuel Price Escalator (FPE) was the practice of automatically increasing hydrocarbon oil duty (better known as 'fuel duty') in the United Kingdom ahead of inflation. The escalator was introduced in 1993 as a measure to stem the increase in pollution from road transport and cut the need for new road building which was then a politically sensitive topic. The escalator also resulted in significant increases in revenue for The Treasury.

The fuel price escalator was introduced by the Conservative government in 1993 and set at an annual increase of 3% ahead of inflation, later rising to 5%. After gaining power in 1997, the rate of increase was raised by the Labour government to 6% per year. The last rise due to the escalator took place following the budget on 9 March 1999.[1] Tax increases above inflation have not ceased, however: the increase in fuel duty for 2009 was above inflation and the tax is planned to increase "on 1 April from 2010 to 2013 by 1 ppl above indexation in each year." [2]

The end to the escalator was announced on 9 November 2000, following the UK fuel protests, of which it was a contributory factor. When the escalator ended, fuel in the UK was the most expensive in Europe, with fuel tax representing over 75% of the retail price of fuel. In 1993 UK fuel had been amongst the cheapest in Europe[citation needed].

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