Labour claims the cost of living is priority one, so why hit drivers with a petrol tax rise now?

Over the coming weeks and months that proposition will be tested. Whether it’s rhetoric or reality will be judgeable based on a simple criteria: does she stop the hike in fuel duty.

From this September, the government will be phasing in a 5p per litre increase in the tax paid on petrol and diesel. It will begin with an additional 1p in September, followed by 2p in December, and a final 2p in March.

This would have been a bitter pill to swallow for motorists at the best of times. These are very much not the best of times. Even ignoring the increase in tax, prices are set to surge, with some forecasting that petrol and diesel could breach £2 per litre.

That will have impacts on the wider economy. It’s not just families paying more to drive their children to school, or pick up groceries. It’s cab drivers, tradees, lorry drivers. Any business which relies on road transport in some kind will face higher bills. These higher bills will feed through to higher prices. Inflation could well and truly be back.

The government is desperately trying to appear as if they’re in control of the situation. They talk of action on price gouging, of releasing oil and gas reserves. But this is smoke and mirrors to distract from the most obvious and simple lever they could pull: to abandon the proposed plan to hike fuel duty.

Bear in mind this is not even a tax cut we are talking about here. That would be the ideal situation. Perhaps the government could look at disapplying VAT to fuel duty. Currently, VAT is charged not only on the pre-tax price of the fuel. It’s also charged on the fuel duty that is added to that price. A tax on a tax, which adds 11p to every litre, or round £6 to every full tank of petrol.

What is being called for here, by us and by leading politicians in Reform UK and the Conservative Party, is for the cancellation of an increase. For the chancellor to not pour petrol on the fire.

Now there are some who enthusiastically supported the chancellor’s decision to increase fuel duty. Many commentators grew frustrated at the fact that the government is happy to freeze fuel duty every year, and even cut it in the case of Rishi Sunak, yet keep on increasing taxes in almost every other instance. Focus on a different tax cut for a change.

But even with 15 years of freezes plus the 5p per litre cut, the UK still has higher than average rates of fuel duty compared to EU member states. And if the rise goes ahead, as new TaxPayers’ Alliance research has revealed, we will once again start climbing the rankings to have the eighth highest rate of petrol duty and second highest rate of diesel duty. Years of progress on bringing down the sky high bills on motorists will have been undone.

Whatever your views on fuel duty though, we face an emergency at the pumps. We ideally need a chancellor who takes radical action, by delaying net zero targets, scrapping windfall taxes, ending energy subsidies and reversing the ban on new oil and gas fields in the North Sea. We’re not going to get that, let’s be honest. At the very least, though, we should expect her to not fan the flames any further. If Reeves does care about the cost of living crisis, increasing fuel duty at a time like this would be an odd way to show it.

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Elliot Keck is the campaigns director of the TaxPayers' Alliance

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