Ministers Urge Chancellor to Scrap Fuel Duty Hike Amid Rising Prices
Fears grow that planned increases, coupled with global instability, could push diesel prices to £3 per litre.
Ministers are urging Chancellor John Healey to abandon planned fuel duty increases, citing concerns over the potential economic impact and the escalating cost of living. The proposed phased hike, set to begin in January, comes at a time when diesel prices have reached record highs, according to the RAC.
Senior government figures have conveyed to the Daily Mail that proceeding with the increase would be untenable for a government aiming to address cost-of-living pressures. One minister emphasized the need to find alternative revenue streams, stating, "We just cannot let this rise go ahead and credibly claim we are a cost-of-living government – it is unthinkable."
Diesel prices are currently at an all-time high of £1.99 per litre, exacerbated by supply disruptions related to the conflict in the Middle East. Concerns have been raised that prices could surge further, potentially reaching £3 per litre, if former President Donald Trump implements measures to curb diesel exports to the UK in an effort to lower domestic prices.
A Cabinet source highlighted the critical role of diesel in the national economy, extending beyond personal transportation to the entire supply chain for consumer goods. "The whole country runs on diesel – it is not just people going to work, it is everything on the supermarket shelves," the source stated. "I think everyone, including John, understands that we can't be seen to be adding to the problem right now."
Current plans outline a 3p per litre increase on January 1, followed by an additional 2p increase on March 1. The Treasury is also scheduled to end a 16-year freeze on fuel duty, adding another 1p in April. When combined with VAT, this amounts to a potential increase of 7.2p per litre, which could add nearly £4 to the cost of filling a family car with petrol.
Treasury sources have indicated that no final decision has been made regarding the fuel duty increases. However, retaining the existing 5p per litre duty cut alone would represent a £2.4 billion annual loss to the Treasury, a significant concern for Mr. Healey as he manages government finances.