Prime Minister Keir Starmer has announced an extension to the temporary 5p cut in fuel duty, telling the Commons it was a necessary response to cost-of-living pressures. The move, widely expected, also includes a vehicle tax break for the haulage industry.
At the last budget, Chancellor Rachel Reeves had announced she would freeze fuel duty for nine months but end the temporary 5p cut, first introduced by Rishi Sunak in 2022 after Russia's invasion of Ukraine, beginning in September. Now, Starmer has confirmed the freeze will be extended for the rest of the year.
Details of the Announcement
During Prime Minister's Questions, Starmer was asked by Labour MP Kirsteen Sullivan about further help with cost-of-living pressures. He replied: "There is more that we can do, and I can announce today that we are giving our hauliers a 12-month vehicle tax holiday, helping to keep prices down, and we are backing drivers by extending the freeze in fuel duty for the rest of the year."
Starmer attributed the decision to the chancellor's economic management, noting: "This is possible because of the decisions taken by the chancellor, making us the fastest-growing economy in the G7. She will set out further action tomorrow."
Referring to increased fuel prices caused by the US-Israeli attack on Iran, Starmer added: "This is not our war, but while the parties opposite wanted to jump into it, Labour will always protect working people."
Political Reactions
Conservative leader Kemi Badenoch sought to claim credit for the decision, calling it a U-turn caused by her pressure. Starmer rejected this, saying it was only because of what had happened with Iran, and quipped: "I know the leader of the opposition likes to claim responsibility for things that have got literally nothing to do with her. In her mind, she won Eurovision on Saturday and scored the winning goal in the FA Cup final."
Cost and Savings
The cost of the package, including postponing the 5p rise and the discount on red diesel duty, is expected to be around £400 million. The chancellor will set out more details on Thursday about how it will be funded. The Treasury has not made clear whether the full 5p increase would go ahead in January, insisting the timing of any future move will be announced at the autumn budget.
A Treasury announcement, released as Starmer spoke, said that by the end of 2026 the freeze of fuel duty would have saved the average driver £120 over two years, while the one-year pause on vehicle excise duty would save £600 for a typical heavy lorry.
In quotes released by the Treasury, Reeves said: "The war in Iran is pushing up fuel prices here at home but after strong growth at the beginning of the year, I am stepping in to protect people at the pump. By protecting households and businesses we are building a stronger and more secure economy for Britain. That is the right economic plan."
