Fuel duty hike would 'hurt everyone' as petrol and diesel drivers prepare for major Labour decision

Then-Chancellor Rishi Sunak introduced the five pence per litre fuel duty cut in a bid to lower petrol and diesel prices, estimating that it would save the average driver £100 per year.

This was again extended in March 2023 and March 2024 in the final Budget of the Conservative Government, when Jeremy Hunt announced that the fuel duty freeze would continue for another 12 months.

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However, Prime Minister Keir Starmer and Chancellor Rachel Reeves have warned Britons that the upcoming October 30 Autumn Budget will be "painful" amid a £22billion funding black hole left by the Conservative Government.

Despite this, the AA is urging the Government to protect the fuel duty freeze to "protect household budgets, the voluntary care sector, the wider economy and drivers".

Research from the motoring organisation found that low income households would be hit the hardest if the Chancellor were to increase fuel duty rates, as 55 per cent of people saying they are worried about the price of fuel.

A further two-fifths (45 per cent) said they were concerned about the prospective rise in fuel duty, which would hike the tax back to 57.95p per litre.

This research has been supported by East Anglia University which shows that less well-off households are spending as much as 20 to 30 per cent of their disposable income on petrol.

Edmund King, President of the AA, said the scrapping of the 5p fuel duty freeze would "hurt everyone" with an "unnecessary hike" in petrol and diesel prices.

He added: "As well as being ‘the voice of the motorist’, The AA understands the wider impact any rise in fuel duty has on the wider economy.

"Household budgets are already stretched and everyone benefits from a temporary suppression in fuel duty. Even households without a car feel the benefit of discounted fuel duty through cheaper bus fares and more affordable goods from supermarkets."

Data from the HMRC Hydrocarbon Oils Bulletin shows that the UK used 56.4 billion litres of petrol and diesel in the last financial year, with an increase in fuel duty sending £2.3billion to the Treasury, rather than from potential consumer spending.

The AA highlights how the Government already enjoys a 20 per cent VAT fee from the majority of consumer spending on private transport including £57.4billion spent on the purchase of cars and £78.6billion on the "operation of personal transport".

The Community Transport Association warned: "The current Approved Mileage Allowance Payments (AMAP) rate does not reflect the real costs of motoring in 2024, leaving volunteers out of pocket, threatening the future of voluntary services and the people who depend on them, those who are most in need of support.”

King did acknowledge the difficult decisions that needed to be made by the Government but said targeting fuel duty could "backfire" on working people and fuel inflation.

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He concluded, saying: "The car remains an essential form of mobility and affordable road transport is essential to the health of the nation."

Speaking previously to GB News, Prime Minister Keir Starmer said Labour would consider fuel duty on a "Budget-by-Budget basis".

A HM Treasury spokesperson told GB News: “Following the spending audit, the Chancellor has been clear that difficult decisions lie ahead on spending, welfare and tax to fix the foundations of our economy and address the £22billion hole in the public finances left by the last government.

"Decisions on how to do that will be taken at the Budget in the round.”