The five-pence-per-litre cut to fuel duty, scheduled for removal in September, is to remain in place to help counter rising petrol and diesel costs, according to reports.
The cut was introduced in 2022 in response to the surging fuel prices that followed Russia’s invasion of Ukraine. But while pole signs broadcast lower numbers today than they did four years ago, with the Strait of Hormuz still largely closed, and petrol and diesel prices showing no signs of falling, the Chancellor is set to announce the removal of the 5ppl discount, scheduled to begin in September, will not go ahead.
Rachel Reeves’ Budget in November brought with it an announcement that the discount would be wound down with a 1ppl rise in September, followed by a 2ppl hike in December, and a final 1ppl increase in March 2027.
Now, The Times reports that two senior government sources have said Reeves will on Thursday (May 21) announce an extension to the discount, at a cost to the Treasury of £2.4bn. A number of other measures designed to help with the cost of living are also set to be announced this week.
A litre of unleaded currently stands at 158.59p and diesel 187.22p, according to the government’s Fuel Finder database, roughly 25p and 44p up compared to before the start of the latest Iranian conflict. Brent Crude, meanwhile, is trading at $110 a barrel, up from around $65.
The government has received an estimated £500m bonus from rising VAT receipts brought about by ballooning fuel costs, while drivers have spent an additional £3bn on petrol and diesel since the conflict began, according to an analysis by pressure group FairFuel UK.
The organisation’s founder, Howard Cox, comments: “Time and again, over 16 years of campaigning, we have shown that lower fill-up costs deliver more tax to the Treasury by boosting other tax revenue streams”.
He adds: “The current cost of petrol, particularly diesel, is crippling motorists’ and small businesses’ ability to spend in the economy”.
