Fuel Duty Freeze Could Be Coming to an End
Experts are urging Chancellor Rachel Reeves to reconsider the long-standing freeze on fuel duty in the upcoming Budget, arguing that any increase would have a "negligible" impact on inflation.
The Chancellor is set to reveal the Government’s financial plans and policies on Wednesday, November 26, with several measures affecting motorists expected to be under review, including the rumoured pay-per-mile road tax scheme aimed at EV drivers, but could be rolled out for all vehicles in a major shake-up of the current Vehicle Excise Duty.
Fuel duty has been frozen since 2011, though the previous Conservative Government temporarily cut it by 5p per litre in March 2022 in response to the spike in global fuel prices after Russia's invasion of Ukraine.
In a surprising move, Chancellor Reeves later announced an extension of the 5p per litre fuel duty cut until March 2026, drawing mixed reactions from the motoring sector.
Limited impact on inflation
According to analysis by Green Alliance, raising fuel duty in line with inflation during the last Autumn Budget would have increased inflation by just 0.06 per cent.
Steve Coulter, head of economy at Green Alliance, said:
Faced with a difficult Budget, the Chancellor must raise revenue, but she can also eliminate subsidies for harmful activities and do the right thing for the environment. She would tick all these boxes by reversing the 15-year failure to implement inflation-linked rises in fuel duty.
Coulter also noted that wealthier drivers have disproportionately benefited from the freeze, thereby contributing to higher pollution levels.
Average fuel costs for drivers
Currently, our Fuel Watch indicates that drivers are paying on average 135p per litre for unleaded and 143p for diesel. While no major changes are expected immediately, any adjustment to fuel duty could push these prices higher.
Environmental groups are calling for the freeze to be lifted, arguing that it would not only restore government revenue but also encourage a shift toward cleaner transport alternatives.
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