Chancellor George Osborne announced he would scrap a planned 4p rise in fuel duty in what he called his “Budget for growth.”

Mr Osborne, who delivered the government’s Budget today, cancelled Labour’s fuel duty escalator and cut duty by a further 1p.

He also froze alcohol duties and air duty, but increased tobacco tax by two per cent.

The chancellor unveiled a series of measures aimed at boosting enterprise and said the amount people can earn before paying tax will rise by around �600 from April next year.

He said council tax would be frozen or reduced in every English council.

Mr Osborne told MPs: “Last year’s emergency budget was about rescuing the nation’s finances and paying for the mistakes of the past. Today’s Budget is about reforming the nation’s economy, so that we have enduring growth and jobs in the future.”

But he said the country’s economy will grow at a slower rate than previously predicted.

The fuel duty move takes effect at 6pm today.