George Osborne is to offer gas firms hundreds of millions of pounds in tax breaks in a humiliating bid to stop his Budget blowing up in his face.
The Chancellor has been forced to act after warnings his £2billion raid on energy giants' profits could send prices soaring as they pass on the bill to customers.
The Treasury confirmed "field allowances" could be paid to gas firms investing in the North Sea as it tried to deflect protests over the windfall tax.
Mr Osborne slipped the levy on North Sea oil and gas firms into his Budget on Wednesday to pay for his 1p cut in fuel duty. His climbdown came after reports that British Gas owner Centrica could cut investment in the Morecambe Bay gas field leaving the UK more dependent on imports from Russia and the Middle East.
The blunder came as it emerged hundreds of filling stations had failed to pass on the 1p-a-litre cut in fuel duty. Shadow Treasury Chief Secretary Angela Eagle said: "This is yet another Budget con from George Osborne. He boasted of a 1p cut in fuel duty, but knew all along that drivers would not see the benefit."
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Mr Osborne's Budget will also force those on modest wages to pay more National Insurance while the rich pay less, say independent House of Commons statisticians.
Under his shake-up of NI contributions, someone on £10,000 a year will be £49 worse off in 2015, while those on £100,000 a year will pocket an extra £61.
The gap widens so a person on £10,000 will be £107 worse off in 2020, while anyone paid £100,000 will be £261 better off.
In another blow, ex-Chancellor Lord Lamont branded Mr Osborne's idea of merging NI and income tax payments as a "huge elephant trap" he dumped 20 years ago.
And, embarrassingly, ministers will earmark £180million to reverse the deeply unpopular decision to axe Educational Maintenance Allowances to help teens stay at school.
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