Budget Fuel Duty Hike Threatens Driver Pocketbooks
Chancellor Rachel Reeves is facing mounting pressure to abandon plans for a multi-billion pound Fuel Duty increase in next week's Budget, as new analysis reveals the devastating impact this would have on already squeezed motorists.
Average pump prices have just hit an eight-month high, reaching 136.2p per litre for petrol and 144.6p for diesel. This is the most expensive fill-up since March, placing further strain on household finances.
AA Analysis Predicts Soaring Costs
According to a stark warning from the AA, if Chancellor Reeves decides to scrap the 5p per litre relief on the levy, the situation would deteriorate dramatically. The study forecasts prices would surge to 142.2p for petrol and 150.6p for diesel.
This projected increase includes an extra 1p in VAT, which retailers would almost certainly pass on to consumers. When years considered non-comparable due to the Covid-19 pandemic and the war in Ukraine are excluded, this would represent the highest price at the pumps since April 2012.
The 5p relief was initially introduced by then-Chancellor Rishi Sunak in 2022 during a period of soaring global oil prices. It has been in place ever since, saving drivers billions of pounds, and is not officially due to expire until April 2026.
Political and Economic Fallout
Ditching this relief in the upcoming Budget would net the Treasury between £2 billion and £3 billion annually. The Chancellor is reportedly scrambling to fill a black hole in the public finances, having already been forced to abandon plans to raise income tax.
However, any move to hike Fuel Duty is likely to spark fierce accusations that the Labour government is declaring war on motorists. This is compounded by reports that the Chancellor is also considering a new 'pay per mile' stealth tax for electric vehicles.
AA President Edmund King strongly criticised the potential move, stating: "Hiking UK fuel duty, with global turmoil threatening oil prices at every turn, could be disastrous for the UK economy and drivers dependent on road travel." He added that ramping up motoring costs would hammer working people, add costs to businesses, and ultimately fuel inflation.
Simon Williams, the RAC's fuel spokesperson, echoed these concerns, urging the Government not to hit drivers in the pocket at a time when driving is a necessity for millions.
