Keir Starmer's cost of living tsar has today called on the Government to abandon a scheduled increase in fuel duty, as British motorists face escalating pump prices driven by the ongoing conflict in Iran. Richard Walker, the chief executive of supermarket chain Iceland, has intensified the mounting pressure on Chancellor Rachel Reeves to cancel the impending fuel duty rise set for September.
Fuel Duty Freeze and the Impact of Global Crises
Fuel duty has remained frozen since 2011, with a temporary 5p per litre reduction implemented in 2022 in response to Russia's invasion of Ukraine. However, in her Budget last year, Chancellor Reeves announced that this 5p cut would be gradually reversed between September this year and March 2027. This plan is now under scrutiny due to the Middle East crisis, which has triggered a sharp surge in global oil and gas prices, leading to demands for a policy U-turn.
Soaring Pump Prices and International Comparisons
According to the RAC, the average price of a litre of diesel at UK forecourts has reached 185.2p, marking a 30 per cent increase since the Iran war began on February 28. Meanwhile, average petrol prices have climbed to 154.5p per litre, a rise of 16 per cent over the same period. Other nations, including Australia, have already taken measures to mitigate the impact of price hikes on drivers amidst the Middle East turmoil.
In an interview on BBC Radio 4's Today programme, Lord Walker stated: 'The 5p fuel duty cut... is an interesting one. That's going to expire in September. I think given where we are, we do need to be thinking and talking about extending it or enlarging it.' He highlighted that the Australian government recently implemented a 14p per litre reduction in fuel tax, contrasting it with the UK's 5p cut.
Political and Economic Pressures
Lord Walker was also questioned about comments from Tory peer Simon Wolfson, who argued that the Treasury should not profit from the Iran war through increased fuel duty tax takes. Wolfson, the chief executive of Next, suggested the Government could adjust duty rates to ensure tax revenue remains stable. In response, Labour peer Lord Walker acknowledged: 'Lord Wolfson is a great guy and very intelligent, and he might have a point there.'
The Prime Minister has previously pledged to keep the planned fuel duty rise under review in light of the Iran situation. While the Government has enhanced efforts to help drivers locate the cheapest fuel via price comparison sites, rival political parties are advocating for more immediate action.
Alternative Proposals from Political Parties
Various parties have outlined their own strategies to alleviate the burden on households. The Conservatives have proposed removing VAT on energy bills for the next three years. Reform UK has committed to reducing VAT on fuel and eliminating green levies on energy bills. The Liberal Democrats have advocated for a 10p cut in fuel duty.
A Treasury spokesperson defended the Government's approach, stating: 'We have the right economic plan for a more volatile world, taking a responsible approach to supporting working people in the national interest. Fuel duty is frozen until September and we're enabling targeted support for those facing higher heating oil costs. We're also acting to protect people from unfair price rises if they occur and to bring down food prices at the till.'
Background on Richard Walker
Sir Keir Starmer appointed Lord Walker as his 'cost of living champion' in February, despite the Labour peer previously giving the Prime Minister only a 'six out of 10' rating. The 45-year-old chairman of Iceland, and son of the supermarket chain's founder, initially aspired to be a Conservative MP but left the party in 2023 before endorsing Labour.
Although he attended the launch of Labour's manifesto ahead of the 2024 general election, Lord Walker later expressed criticism of Sir Keir's early months in power. Last year, he rated the Government's performance as a lacklustre six out of ten and voiced concerns over Chancellor Reeves' tax increases on businesses. Despite these critiques, Sir Keir awarded Lord Walker a life peerage at the start of this year.
