Chancellor 'set to raise fuel duty by 7p a litre' after 14-year freeze in bid to fill black hole in public finances
18 October 2024, 07:15
Chancellor Rachel Reeves is set to raise fuel duty by 7p a litre in a bid to raise extra cash in this month's Budget.
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Ms Reeves will not renew a "temporary" 5p cut in fuel duty due to end in March 2025, it is understood.
She is also said to be considering restoring the annual fuel duty rise.
It comes after Treasury officials said she has a "now or never" opportunity to end the 14-year freeze, according to the Mail.
The change would add another 1p or 2p to the duty levied at the pumps. Another penny would be added to the price for VAT.
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A Whitehall source said: "Ms Reeves' officials are telling her it's now or never on fuel duty.
"The Treasury always hated the fuel duty freeze and is determined to get rid of it.
"They are advising her that motorists can afford it and that if she doesn't act to end the freeze now she will find it much harder to do so later in the parliament."
A 7p increase in fuel duty will add around £3.85 to the cost of filling up an average family car.
The Treasury is said to have modelled raising fuel duty by as much as 15p a litre.
But Ms Reeves is not expected to announce an increase on that scale due to it sparking a larger backlash from motorists.
She will deliver Labour's first budget on October 30.
Adam Corlett, from the Resolution Foundation think tank, said: "Fuel duty is set to rise by around 6p a litre next spring due to inflation and a temporary cut expiring.
"Cancelling this and future annual increases would cost £5billion a year by the end of the parliament – money the Chancellor simply doesn't have as she tries to plug a £40billion funding hole for our schools, hospitals and other public services."
Howard Cox, from campaign group FairFuel UK, said drivers are set to be "punished hard".
A Treasury spokesman said: "We do not comment on speculation around tax changes outside of fiscal events."
