Motoring groups have welcomed Jeremy Hunt’s decision to freeze fuel duty for another 12 months as part of his Spring Budget announced on Wednesday.
The Chancellor confirmed that the 5p per litre cut implemented in March 2022 will be retained for another 12 months, and fuel duty will not increase in line with inflation.
This will save the average car driver £50 next year and bring “total savings since the 5p cut was introduced to around £250”, Mr Hunt said.
Government figures show the average cost of a litre of petrol and diesel at UK forecourts is around £1.45 and £1.55 respectively.
Prices reached record highs of £1.92 for petrol and £1.99 for diesel in July 2022, largely due to Russia’s invasion of Ukraine leading to an increase in the cost of oil.
RAC head of policy Simon Williams said: “With a general election looming, it would have been a huge surprise for the Chancellor to tamper with the political hot potato that is fuel duty in today’s Budget.
“It appears the decision of if or when duty will be put back up again has been quietly passed to the next government.
“But, while it’s good news that fuel duty has been kept low, it’s unlikely drivers will be breathing a collective sigh of relief as we don’t believe they’ve fully benefited from the cut that was introduced just two years ago due to retailers upping margins to cover their ‘increased costs’.
“This has meant fuel prices have been higher than they would otherwise have been.
“What’s more, despite today’s positive news it’s still the case that drivers are once again enduring rising prices at the pumps, sparked by the oil price going up – the average cost of a litre is already up by more than 4p since the start of the year.”
Mr Hunt’s decision means fuel duty will remain at 52.95p per litre for petrol and duty.
Before the 2022 cut, it had been frozen at 57.95p since March 2011.
VAT is charged at 20% on top of the total price.
RAC Foundation analysis shows tax makes up more than half of pump prices.
The motoring research charity’s director Steve Gooding said: “This freeze is welcome but comes against a backdrop of oil prices – and hence pump prices – creeping back up over the past couple of months.
“Even as it stands, the Chancellor is still getting more than 50% of what drivers spend on the garage forecourt in vehicle excise duty and VAT combined.”
