Chancellor Jeremy Hunt will deliver a spring budget on March 15
(Picture: REUTERS)The Chancellor is reportedly planning to extend the 5p fuel duty cut for another year if the economic outlook improves.
Jeremy Hunt wants to extend the reduction in the price of petrol and diesel in his spring budget if public finances allow, The Times reports.
There are concerns that imposing additional costs on drivers would be “toxic” and there is a “strong precedent” for freezing fuel duty.
The Treasury is also facing pressure to freeze fuel duty for another year. If both measures go ahead it would cost the Government an estimated £6 billion.
“Hunt doesn’t want to do anything that stokes inflation,” a friend of the Chancellor told The Times.
Then-chancellor Rishi Sunak announced the 5p fuel duty cut in March 2022, saying it represented the biggest cut ever, following a rise in pump prices after Russia’s invasion of Ukraine.
In December, Tory MPs warned Mr Sunak that raising fuel duty by 12p would be “political suicide” with Britons already suffering with the cost-of-living crisis.
The prime minister had been examining ways to get more money into government coffers and has refused to rule out the hike in the budget in March.
A Centre for Economics and Business Research (Cebr) report warned such a rise could push up inflation by more than 2 per cent, wipe 1 per cent off GDP and cause 31,000 job losses.
Meanwhile, Conservative MPs feared that a significant fuel duty rise would dent the party’s chance of regaining ground on Labour.
The RAC and AA have been pushing for an extension to the 5p cut beyond March due to the continued high pump prices and the cost-of-living crisis.
The latest average petrol price is 154.1p per litre and diesel is 177.7p per litre.
The average price of petrol in London was 156.7p per litre in December, up from 146.4p in 2021.
Howard Cox of FairFuel UK said: “The Government has to bring forward the planned income tax cut too, reduce fuel duty significantly, implement PumpWatch and deliver a one-off windfall tax on opportunistic oil companies, making sure those proceeds are ring-fenced to help those suffering in the cost of living support.”
Inflation dipped to 10.5 per cent last month from 10.7 per cent in November, according to the Office for National Statistics (ONS).
Two of the biggest factors in the inflation surge over the past two years have been the end of the pandemic, which led to a sudden explosion of global demand when economies opened up, followed by the war in Ukraine.
It has led to what the Office for Budget Responsibility has forecast to be the biggest squeeze on living standards on record by the end of 2024.
The Chancellor will deliver a spring budget on March 15.
