Chancellor Rachel Reeves is planning a quicker and steeper 'stealth' raid on drivers in the New Year after delaying previous proposals to hike fuel duty, figures suggest. Figures quietly published by HMRC indicate that the Chancellor will impose a 3p per litre fuel duty increase in one go on 1 January.
Under previous plans, which she postponed last week until the end of the year, a 3p increase out of a total 5p per litre hike was to be introduced gradually over three months. That would have seen fuel duty rise by 1p per litre on 1 September, 2p per litre on 1 December, and another 2p on 1 March next year. However, the HMRC figures, quietly published after last week's announcement, assume fuel duty on petrol and diesel will leap from 52.95p to 55.95p per litre on 1 January, with the remaining 2p hike still taking effect from 1 March. This would bring fuel duty back up to 57.95p per litre, the highest level in more than four years, after the Tories cut it by 5p per litre in 2022 amid soaring pump prices sparked by Russia's invasion of Ukraine.
During last week's announcement, Ms Reeves did not reveal whether she would maintain the phased introduction of the hike when it goes ahead, leaving several questions unanswered about how it would be implemented. Chancellor Rachel Reeves was heckled during a photo shoot to promote the fuel duty announcement at a forecourt in Leeds last week, branded 'a sleight of hand' today because of the latest disclosure. A man driving a white van heckled the Chancellor at the forecourt in Leeds where she was promoting her fuel duty announcement last week, branded 'a con' today because of the latest disclosure.
Tory Shadow transport secretary Richard Holden said the latest revelations were a 'U-turn on a U-turn' because Labour 'won't control welfare spending and its drivers paying the price'. MPs and motoring groups said the disclosure was a major blow for households, just as energy bills soar in the New Year to keep the heating on during winter. Tory MP Greg Smith said: 'The Chancellor wants us to think she's being generous. But the detail always reveals the truth - she's still tax gouging motorists, just in a sneakier, stealthier way. Our fuel duty in the UK is astronomical compared to others. If she wants to support motorists to get on with their lives she should scrap these hikes altogether, not compound the war on motorists.'
Tory Shadow transport secretary Richard Holden added: 'This is a U-turn on a U-turn from Labour because they won't control welfare spending and its drivers paying the price. We are clear: Labour should abandon their tax raid on drivers in the middle of an energy crisis.' John O'Connell, chief executive at the TaxPayers' Alliance, said: 'Motorists will see right through this latest fuel duty sleight of hand from Rachel Reeves. Delaying tax hikes by a few months only to hit drivers with a larger increase later is pure smoke and mirrors from a Treasury desperate to squeeze more out of taxpayers. Reeves should scrap these planned fuel duty rises altogether instead of treating drivers as an endless cash machine.'
AA President Edmund King said: 'The 3p hit on January 1 will be an unwelcome New Year present. As the previous increases were planned to be phased, we believe that similar phasing should be added to this increase if it is to go ahead.' Howard Cox, founder of the FairFuelUK campaign, said the latest disclosure meant the Chancellor's announcement last week was effectively 'a con'. Since the Iran war sent pump prices soaring, filling the average 55-litre tank in a family car with petrol has jumped by around £14 and over £24 for diesel.
Howard Cox, founder of the FairFuelUK campaign, said: 'Labour's latest smoke and mirrors con offers motorists misleading short-term relief for a few extra months in 2026, while a huge 3p duty hike, hidden in HMRC's small print, will now hit drivers hard after Christmas.' Ms Reeves hailed the decision last week to postpone her fuel duty hike after weeks of mounting pressure amid sky-high pump prices sparked by the Iran War and the Strait of Hormuz being blockaded. But she clashed with an angry white van driver at a forecourt in Leeds while unveiling the policy, who accused her and Labour of being 'useless' and 'ruining the country'.
Labour had been accused of dragging its feet over fuel taxes after several other countries slashed them amid soaring global oil prices to help out hard-pressed drivers. Treasury sources say the Chancellor could still scrap January's hike in this year's Autumn Budget, with no final decisions being made until then. Speaking in the Commons last week, Ms Reeves said: 'The freeze in fuel duty will continue until the end of this year, and we will keep it under review, depending on what happens in the Middle East.' While average diesel pump prices have dipped to 184.96p per litre after hitting a high of 191.54p following the outbreak of the war, petrol climbed to a new post-war high yesterday of 159.43p per litre. It means diesel remains 43p per litre more costly than before the war broke out on 28 February, while petrol is 27p dearer.
According to analysis by the RAC Foundation, the Iran war has collectively cost drivers an extra £3.1 billion at the pumps because of soaring prices sparked by oil supplies being squeezed due to the war. In turn, Ms Reeves has raked in more than £500 million more in VAT as higher pump prices mean the 20 per cent levy accounts for a bigger slice going towards Treasury coffers.
