THE Government is insisting there will be no U-turn over its commitment to increase fuel prices by 6% above inflation until 2002, despite warnings the policy could lose it as many as 100 seats at the next election. The fuel tax escalator has been heavily criticised by motoring organisations, such as the AA and RAC, since it has led to the UK having the highest petrol and diesel prices in Europe.

It has also been blamed for the cautious approach many fleet managers have given alternative fuels because they are wary of them being hit by similar tax hikes. Hopes of a policy change were raised that the Government was considering a U-turn on the escalator by comments made by the Prime Minister at the TUC conference and by environment minister Michael Meacher.

Tony Blair admitted that there had been 'two tough years' of 'unpopular' fuel tax rises. Meacher was also thought to have been hinting at the demise of the escalator in a radio interview during which he said: 'The commitment is that it shall continue until 2002. The key point is that we have to carry people with us. You can't lay down a set of environmental or social dictats and expect the population to agree. We have to get their consent - that's what politics is about.'

However, a Treasury spokeswoman said: 'Absolutely nothing has changed in policy terms. If the Chancellor does reconsider he won't let us know until the next Budget.' She pointed to a later comment by Meacher in the interview when he said about policies like the fuel tax escalator: 'It isn't enough, but I do think we are certainly giving a lead, not only in Europe but across the world.'