Budget 2024: Chancellor confirms fuel duty freeze to continue in 'sigh of relief' for drivers
by Catherine Addison-Swan · ChronicleLiveThe Chancellor has confirmed that fuel duty will NOT increase in a surprise Budget announcement, following speculation that motorists would face increased prices at the pump.
Rachel Reeves announced in the Labour Government's first Budget that fuel duty will be frozen next year, costing the Treasury more than £3 billion. This means that the 5p per litre cut in fuel duty, introduced by the Conservative government in March 2022 in a bid to combat surging oil prices and high inflation, will continue.
In her speech to the Commons on Wednesday, Reeves admitted the move was a "substantial commitment" for her party, but insisted that raising taxes on fuel would be "the wrong choice for working people". Until the 5p cut, fuel duty had been frozen at 57.95p per litre since March 2011.
Reeves had been widely expected to announce that fuel duty would rise by as much as 7p per litre following increasing pressure on Labour to scrap the 5p cut. Government figures show the current average cost of a litre of petrol and diesel at UK forecourts is around £1.34 and £1.40 respectively.
The Chancellor said: "To retain the 5p cut and to freeze fuel duty again would cost over £3 billion next year. At a time when the fiscal position is so difficult, I have to be frank with the House that this is a substantial commitment to make.
"I have concluded that in these difficult circumstances - while the cost of living remains high and with a backdrop of global uncertainty - increasing fuel duty next year would be the wrong choice for working people."
She went on: "It would mean fuel duty rising by 7p per litre. So, I have today decided to freeze fuel duty next year and I will maintain the existing 5p cut for another year, too. There will be no higher taxes at the petrol pumps next year."
Commenting on the announcement, Simon Williams, head of policy at the RAC, said: "Drivers will breathe an enormous sigh of relief after all the speculation that the 5p cut would be scrapped at the same time as pushing duty up beyond the long-term rate of 57.95p.
"It's good to see the Government firmly recognising the importance of the car to millions of households up and down the country. Eight in 10 drivers tell us they are dependent on their vehicles for the journeys they need to make, while 70% of commuters who live in rural areas have no other feasible alternatives to get to work beyond taking the car."
He added: "It's also worth remembering that even as of today 56% of the total price of a litre of petrol is already tax in the form of fuel duty, and the VAT that is charged on top."
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