MPs to vote on petrol tax freeze

Conservative MPs will have to vote on whether they back the chancellor's planned 3p tax rise in fuel duty next week.

Labour's shadow Treasury team has put a motion before the Commons calling on George Osborne to cancel or postpone the planned 3p tax rise in the price of petrol in January.

The average price of a litre of unleaded now stands at just under £1.40. Balls has called on the Treasury to put off the rise until at least April.

"At a time when the cost of living is rising, our recovery is fragile and this out of touch government is giving 8,000 millionaires a tax cut, it cannot be right to hit middle and low income families and small businesses with another tax increase," he said this morning.

He suggested that the government should make up for any shortfall in revenue - expected to be around £550 million - by getting rid of loopholes in other areas.

"I suggest they pay for this move by clamping down on tax avoidance. For example, there is a growing problem with some employment agencies forcing workers to become employees of an umbrella company," he added.

"They then falsely inflate the worker's travel and food expense claims, reducing tax and national insurance, and pocket the avoided tax as profits."

A fuel price escalator was introduced by the previous Conservative government and continued under Labour. During their 13 years in power petrol prices all but doubled and saw fuel protests that brought the country to a standstill.