Motorists are facing record fuel prices as diesel has hit £2 a litre, with unleaded not far behind at £1.75. Filling a family-sized diesel car now costs around £110, almost £32 more than before the US-Iran conflict began, while petrol drivers are paying about £23 more for a full tank.
The situation could get worse, with the world's biggest independent oil trader Vitol Group warning crude could double from just over $100 a barrel to $200. If that happens, many motorists will be driven off the road, unable to keep up with such price increases on top of everything else.
Tax Burden on Every Litre
Andy Burnham cannot control global oil prices, but his government can decide how much tax to levy on every litre. That puts Chancellor John Healey under growing pressure to ease the burden in his Budget on October 28.
When motorists fill up, they are also topping up the taxman's tank. Fuel duty is an excise tax charged at a fixed rate for every litre of petrol or diesel sold, currently at 52.95p a litre. On top of that, motorists pay VAT at 20%, calculated on the whole price, including fuel duty.
Tax accounts for roughly 47% of a litre of petrol costing 175p, and around 43% of diesel at £2. Fuel duty has been frozen at its main rate since 2011, apart from the temporary 5p-a-litre cut introduced in March 2022 after Russia's invasion of Ukraine sent energy prices soaring.
Reeves' Fuel Duty Timebomb
Former Labour chancellor Rachel Reeves continued the freeze and the 5p cut in her 2024 and 2025 Budgets, and even cancelled a planned inflation-linked increase. But she left a timebomb behind for Healey by announcing a gradual reversal of the temporary cut.
Under her timetable, motorists face a 3p rise in January, then another 2p in March, taking fuel duty back towards its pre-2022 level. Desperate motorists want that scrapped and more. Howard Cox, founder of FairFuelUK, has called for a 10p cut in fuel duty to "stop hammering Britain's motorists, hauliers and farmers".
Google Maps Scheme Criticised
So what is Burnham doing? Nowhere near enough, according to critics. The Government has added petrol and diesel prices to Google Maps, promoting it as a way for drivers to find cheaper forecourts. Ministers estimate the scheme could save households around £40 a year.
There is a problem: that information is already available through a range of apps including Waze, PetrolPrices, the AA, Confused.com and RAC Fuel Watch. Burnham is doing little new, while trying to claim the glory for it. Google Maps makes finding cheaper fuel more convenient, but it does not make fuel cheaper. Some motorists have also questioned whether all the displayed prices are accurate or up to date.
Extending the 5p cut prevents the planned tax increase for now, but scrapping the remaining duty altogether would go much further. With fuel duty raising more than £24 billion a year for the Treasury, and Healey's fiscal headroom vanishing by the day, relief is far from guaranteed. Healey has not committed to further fuel-duty cuts in the Budget. He may decide to postpone Reeves's planned increases, but motorists cannot assume relief is coming. So far, Burnham's help is more like a slap in the face, and motorists may get another one in the Budget.
