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Motorists can breathe a sigh of relief following an unexpected fuel duty freeze in the latest budget.
Many expected the price at the pump to be a lot higher following Rachel Reeves’ budget, but in a welcome surprise it was announced that the temporary 5p cut will remain for another year.
Rachel Reeves said it would be the “wrong choice” to increase fuel duty next year. She told MPs during The Budget she has to “take some very difficult decisions” on tax, and noted to retain the 5p cut and freeze fuel duty again would cost more than £3 billion next year.
The 5p cut was introduced by the Conservative government in 2022 as part of Rishi Sunak’s spring mini budget. Before that, fuel duty had been frozen at 57.95p per litre since March 2011.
Government figures show the average cost of a litre of petrol and diesel at UK forecourts is around £1.34 and £1.40 respectively.
Prices reached record highs of £1.92 for petrol and £1.99 for diesel in July 2022, largely due to Russia’s invasion of Ukraine leading to an increase in the cost of oil.
Analysis by motoring research charity the RAC Foundation shows tax makes up around 55% of pump prices.
RAC head of policy Simon Williams said: “It’s good to see the Government firmly recognising the importance of the car to millions of households up and down the country. Eight in 10 drivers tell us they are dependent on their vehicles for the journeys they need to make.”
But Hirra Khan Adeogun, co-director of climate charity Possible, claimed freezing fuel duty is “completely the wrong thing to do”.
She said: “Fuel duty will now be frozen for 15 years, while the cost of public transport has gone up and up each and every year. This is completely the wrong way around, and we need to move to a system which makes the greenest ways of getting around the cheapest and most convenient.”
Prior to the budget announcement, environmental and transport campaigners urged Rachel Reeves to bring the cost of motoring more in line with other forms of transport, after more than a decade of fuel duty freezes at the pumps and heavy increases in rail fares.
Treasury officials are also reportedly lobbied the chancellor to seize the opportunity to make the hike in duty, with petrol prices at a relative low compared to the start of the freeze in 2024.
