Chancellor Rachel Reeves is planning to cancel a scheduled increase in fuel duty as part of a package of measures aimed at reducing the cost of living, government sources have confirmed. The move would shelve a 1p rise due in September and potentially halt further increases totalling 5p over the following six months.
The decision, expected to be announced to the House of Commons on Thursday, is intended to offset inflationary pressures driven by the conflict in Iran. Reeves had previously frozen fuel duty for nine months but indicated she would end a temporary 5p cut introduced by Rishi Sunak in 2022, beginning this autumn.
Pressure to extend the 5p cut has mounted in recent months, with the cost to the government estimated at £2.4bn a year. Richard Walker, executive chair of Iceland and the government's cost of living champion, recently backed extending or enlarging the cut on BBC Radio 4's Today programme.
Other options to keep prices low, such as freezing private sector rents, have been ruled out. Reeves is expected to wait until later in the year to announce an energy bill relief package, as the price cap is fixed until the end of June. She has already allocated £50m to subsidise heating oil for rural households, many in Northern Ireland.
The announcement comes amid political uncertainty, with Greater Manchester mayor Andy Burnham challenging for the Labour leadership ahead of the Makerfield by-election, focusing on affordability issues.
