Cutting tax on petrol would mean less cash for key services, says Blair

Tony Blair insisted he was not "out of touch" with the British people yesterday as he firmly rejected demands by fuel protesters for an across-the-board cut in petrol duty for all motorists.

Tony Blair insisted he was not "out of touch" with the British people yesterday as he firmly rejected demands by fuel protesters for an across-the-board cut in petrol duty for all motorists.

The Prime Minister warned that conceding the 26p-a-litre cut urged by the People's Fuel Lobby would mean less money for pensioners, schools and hospitals and could force a rise in interest rates.

Although he did not rule out special help for hauliers and farmers in Gordon Brown's draft Budget on Wednesday, Mr Blair gave his clearest indication so far that ordinary motorists would not benefit from cheaper petrol prices.

Interviewed on BBC Radio 4's Broadcasting House programme, Mr Blair said: "Let's say I give in to protesters' demands and give people a big cut off the fuel duty. Now, you could say that is in touch, because people want that money off their fuel duty.

"But if it meant a family then ended up with their mortgage payments going up or couldn't get their children decently educated at school or their parents didn't get a decent pension, would that be being in touch?"

The Prime Minister challenged the media's portrait of a Britain in chaos amid the floods, problems on the railways and queues at the petrol stations. "I don't minimise the fact that at the moment there are some very serious issues that we have got to tackle as best we can," he said. He insisted there were also "things that are very strong about this country".

Mr Blair said tax cuts were still on the Government's agenda but made it clear he believed that investing in public services should take priority.

Digby Jones, director general of the Confederation of British Industry, called on the Chancellor last night to reduce business taxes by £3bn including transport costs. He also warned that the threatened new wave of fuel protests will cause "immense damage" to industry and urged people not to go "anywhere near" the planned convoy of lorries in a week's time.

As well as hitting the distribution of goods and stopping people getting to work, the protests will portray an "awful image" to potential overseas investors, he said.

Mr Jones, speaking in Birmingham ahead of today's CBI national conference, warned that vital staff such as nurses might not be able to get to work and old people could have problems buying food if the protests lead to fuel shortages.

There were many other ways to protest, said Mr Jones, who urged the Government not to give in to the demands of those organising the demonstrations.

David Handley, chairman of the People's Fuel Lobby, reacted angrily to Mr Blair's interview, saying it gave "no hope" that there would be a cut in petrol duty. He warned that the campaigners would not be satisfied with special measures for hauliers and farmers, but wanted help "for everyone".

However, an opinion poll suggested that the protesters would enjoy a lower level of public support than during their first protest in September. Although 56 per cent of people would support another national fuel protest if the Government does not cut the tax on petrol and diesel, this was lower than the 78 per cent figure in September.

The Mori poll for the Mail on Sunday showed widespread dissatisfaction with politicians' handling of the petrol dispute, with just 21 per cent saying Mr Blair had dealt with it well. The Tory leader William Hague was only marginally ahead on 24 per cent.

Bill Morris, leader of the Transport and General Workers Union, said the Government must "put the pensioners first" and appealed to the protesters not to repeat their blockade.

But the Tories attacked the Government's record on pensioners, issuing figures showing that two-and-a-half million old people were owed money by the Department of Social Security.