Speaking today (29 November) in his Autumn Statement to Parliament, Mr Osborne said that the January rise would not take place while the 5p rise scheduled for August will be reduced to 3p.

The move follows the Chancellor’s decision in the Budget to cut duty by 1p – as a result of both decisions, Mr Osborne said that taxes on petrol will be a full 10 pence lower than it would have been otherwise.

The decision on fuel duty has been greeted by RMI Petrol chairman Brian Madderson, who said that the January increase would have raised prices at the pump by 4.00 pence per litre (ppl) within days, pushing diesel to a new record high of over 145ppl.

However, he highlighted that even with the fuel duty freeze the UK still levies the highest duty on diesel in the EU and said that duty needs to be cut by 26ppl to achieve parity with the average diesel rates across the EU.

Madderson continued: ‘RMI Petrol will continue to lobby Government and their officials to defer the duty increase still planned for 1 August next year. With RPI inflation indexing and 20% VAT the retail price impact could be 4.00ppl at the pump, which we argue is too much and too early in the cyclical recovery of the economy.’

Mr Osborne also committed £5bn to future infrastructure projects and gave the go-ahead to 35 road and rail schemes including upgrades to the M1, M4, M6, A14 and A45.

He also announced the Government has negotiated an agreement with two groups of British pension funds to unlock an additional £20bn of private sector investment in infrastructure.

The plans were welcomed by the Freight Transport Association.

Simon Chapman, FTA’s chief economist, said: ‘The cost of congestion for businesses and motorists exceeds £20bn each year.  Targeted widening of the motorway and trunk road network, and adding more capacity at bottlenecks offers a very strong rate of return, of between £3 and £13 for every £1 invested. Plans to upgrade sections of industry trade routes on the A14 and the A453, and tackle congestion blackspots on key junctions of the M25 and M1 are welcome news.

‘However, increasing the long-term capacity of routes such as the A14 between the East Coast port and the Midlands, and M4 in South Wales remain in the balance. Congestion on these routes will not go away by Government announcing studies, and industry will be looking for early, tangible progress in providing industry with the journey time reliability it needs.’