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Chancellor of the Exchequer George Osborne has announced there will be a 1p per litre cut in fuel tax, taking effect on forecourts at 6pm on March 23.

Motorists will benefit from a 'Fair Fuel Stabiliser' which uses money from the oil industry to reduce fuel costs and a scrapping of the 'Fuel Tax Escalator', which was going to increase fuel costs every year.

Fuel duty was expected to rise with each year's budget, but unprecedented fuel prices have persuaded the Government to reduce its fuel tax to aid struggling motorists.

Called the 'Fair Fuel Stabiliser', the Government will subsidise the cuts with £2bn from the oil industry, which remains highly profitable.

Commenting on the news, Adrian Higgins, web editor at Auto Trader said: "We're running a 2-litre diesel Ford Mondeo test car. The cost of filling it first exceeded £80 and then £90 over the past few months. Scrapping plans to raise fuel duty will mean a lot to drivers who are having to penny-pinch on the road and at home."

The Government has also promised to continue its support for low-CO2 cars, by keeping their road tax low. Road tax will only increase to match inflation.

It has also been announced £100 million will be spent on repairing potholes, despite the £1bn in damage motoring experts have estimated could be inflicted on motorists' cars by potholes this year. Research from potholes.co.uk and its parent company Warranty Direct showed that the number of potholes is in fact on the rise.

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