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Rachel Reeves mentioned it will be the “wrong choice” to extend fuel duty subsequent yr, saying she would proceed the freeze and preserve the non permanent 5p minimize for one more yr.
She advised MPs throughout The Budget she has to “take some very difficult decisions” on tax, and famous to retain the 5p minimize and freeze fuel duty once more would price greater than £3 billion subsequent yr.
This means the 5p per litre minimize in fuel duty launched by the Conservative authorities in March 2022 will proceed.
Until the 5p minimize, fuel duty had been frozen at 57.95p per litre since March 2011.
VAT is charged at 20% on prime of the whole worth of fuel.
Ms Reeves mentioned: “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.
“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.”
But how does it work?
Government figures present the typical price of a litre of petrol and diesel at UK forecourts is round £1.34 and £1.40 respectively.
Prices reached document highs of £1.92 for petrol and £1.99 for diesel in July 2022, largely as a result of Russia’s invasion of Ukraine resulting in a rise in the price of oil.
AA president Edmund King mentioned: “In this eve-of-Halloween Budget, the Chancellor has conjured up a treat for drivers.
“Since Covid and the start of the Ukraine war, perma-high pump prices have inflicted road fuel costs that were well above anything motorists had endured before.”
RAC head of coverage Simon Williams mentioned: “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.”
Analysis by motoring analysis charity the RAC Foundation reveals tax makes up round 55% of pump costs.
Director Steve Gooding mentioned: “Tens of millions of drivers will be breathing sighs of relief.
“We shouldn’t feel too sorry for the Chancellor. She still gets well over half of everything paid at the pumps in a combination of fuel duty and VAT.”
But Hirra Khan Adeogun, co-director of local weather charity Possible, claimed freezing fuel duty is “completely the wrong thing to do”.
She mentioned: “Fuel duty will now be frozen for 15 years, while the cost of public transport has gone up and up each and every year.
“This is completely the wrong way around, and we need to move to a system which makes the greenest ways of getting around the cheapest and most convenient.”
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