THE Chancellor announced that the planned September fuel duty rise will not take place, but he resisted calls to cut duty - to the disappointment of campaign and motoring groups.

The AA said the freeze on duty, for a fourth year, was "very welcome relief for UK drivers".

But AA president Edmund King went on: "The freeze still leaves the squeeze on families and businesses that rely on four wheels to function and prosper.

"Now that we know, from official figures, that inflation-hit earnings are effectively at 2002 levels and car use is struggling to revive, perhaps a short-term cut in fuel duty would have got the UK properly mobile again."

Professor Stephen Glaister, director of the RAC Foundation, said: "The good news is that fuel duty has now been frozen since March 2011. The bad news is that the UK's 37 million drivers still pay the highest proportion of petrol and diesel tax in Europe.

"The Treasury's own analysis shows cuts to duty would boost the nation's economic output.

"Yet the stubbornly high pump prices mean transport costs remain a real concern for the record 18 million people who rely on a car to get to work.

"For those offered low paid employment there is a real question mark over whether they can afford to take it up with travel still so expensive."

Mr Osborne also announced that following the severe winter weather, he was making an extra £200 million available to local authorities to repair potholes.

Prof Glaister welcomed the extra money.

But he added: "The drip, drip of funding does not address the £10 billion road maintenance backlog that councils themselves have identified.

It is also disappointing that this money has to be bid for. This creates a bureaucratic burden and means not all councils and drivers will see the benefits."

The Chancellor also said that the 2% increase in company car tax would be extended to 2017 and 2018, but there would be an increase in discounts for ultra-low emission vehicles and there will be a reduction in the rate of fuel duty for methanol.

mfl Page 2: 14:41 Mr Osborne also announced a number of other transport measures.

There will be a guarantee of up to £270 million to support the raising of debt finance for the Mersey Gateway Bridge - a project that will see a road bridge over the River Mersey in north west England.

Also, the Government is offering to extend the feasibility study on possible improvements to the A1 north of Newcastle upon Tyne further north into Scotland, if the Scottish Government will match fund the costs of the study.

Mr Osborne said that the Government had agreed that the Welsh Government can use existing powers to begin investing in improvements to the M4.

The UK Government is also financially supporting the Greater Cambridge enterprise partnership's transport and infrastructure plans in a deal that could be worth up to £500 million over 15 to 20 years.

Mr Osborne said the vehicle excise duty (VED) car tax would increase by the RPI rate of inflation from April 1 2014 but, as announced earlier, VED rates for lorries will be reduced and restructured from April 1.

Campaign for Better Transport chief executive Stephen Joseph said: "The Chancellor has done little to reduce the everyday cost of transport which remains one of the biggest costs faced by households "The £20 million tax break the Chancellor is giving to bingo halls would be better spent reversing the planned cuts to bus services this year. Extra money to tackle potholes is welcome, but this is a drop in the ocean against the £10bn backlog to local road repairs. These are the issues that matter to people rather than big road building."

Sustainable transport group Sustrans said: "Any money to repair this winter's damage to our roads is welcome but, considering the £10 billion road maintenance backlog, £200 million is nowhere near enough.

"Potholes are dangerous for all road users. Resolving this crisis will save lives."