Brown ready to cancel fuel tax rise

Drivers are to be spared a planned rise in fuel tax for a year, Gordon Brown will announce this week.

The Chancellor will use Thursday's Pre-Budget Report to declare that a 1.92p per litre rise unveiled in the last Budget, and put off in July, has been scrapped.

He believes it is politically unacceptable to put up the duty when drivers face a world hike in oil prices. With the next Budget likely just before the general election, any further rise has been delayed until next November at the earliest.

The move will cost the Treasury at least ?750 million at a time when analysts say Mr Brown is facing a ?10 billion hole in public finances. Government insiders claim the lost revenue is outweighed by huge VAT receipts from the oil price rise.