The planned 11p increase in fuel duty this year is being cancelled, it has been announced by Chancellor Jeremy Hunt. Fuel duty rates are set to stay at the current levels for the next 12 months in a bid to help motorists with "volatile" fuel prices.
The Chancellor confirmed in his Budget that the reduction introduced in March last year will be retained for another 12 months, and fuel duty will not increase in line with inflation. The Treasury said this freeze will help save drivers around £5 billion, and blamed the volatility of fuel prices on "circumstances globally", including "Putin's illegal invasion of Ukraine".
Speaking as part of today's Budget announcement in Parliament, Mr Hunt said: “Because inflation remains high, I have decided now is not the right time to uprate fuel duty with inflation or increase the duty. So here’s what I am going to do: for a further 12 months I’m going to maintain the 5p cut and I’m going to freeze fuel duty too. That saves the average driver £100 next year and around £200 since the 5p cut was introduced.”
Government figures show the average cost of a litre of petrol and diesel at UK forecourts is around £1.47 and £1.67 respectively. Motoring groups have welcomed Mr Hunt’s decision to extend the 5p per litre cut in fuel duty.
Prices reached record highs of £1.92 for petrol and £1.99 for diesel in July last year, largely due to Russia’s invasion of Ukraine leading to an increase in the cost of oil. AA head of roads policy Jack Cousens said: “We are pleased the Chancellor has listened to the AA and frozen fuel duty.
“Not only will this save drivers heavy duty pain at the pump, but it will help keep the price of goods and services down as they are mainly transported by road.”
RAC head of roads policy Nicholas Lyes said: “We welcome the Government’s decision to keep the 5p fuel duty cut in place for another 12 months. The cut has given drivers some much-needed relief in what has been the most torrid year ever at the pumps, with price records being broken even after duty was cut.
“Given the importance of driving for consumers and businesses, duty should be kept low to help fight inflation.”
Mr Hunt’s decision means fuel duty will remain 52.95p per litre for petrol and duty. Before last year’s 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 around half of pump prices.
