UK Ministers Urge Chancellor to Scrap Fuel Duty Hike Amid Economic Concerns

Senior government figures are urging Chancellor John Healey to abandon planned increases to fuel duty, citing concerns about the economic impact and the ongoing cost of living crisis. The proposed phased hike, set to begin in January, comes as diesel prices have reached record highs, prompting fears of further hardship for consumers and businesses.

Sources have indicated to the Daily Mail that proceeding with the increase would contradict the government's stated commitment to alleviating cost of living pressures. "We just cannot let this rise go ahead and credibly claim we are a cost-of-living government – it is unthinkable," one minister stated, emphasizing the need for Healey to "find the money" elsewhere.

Diesel prices recently hit an all-time high of £1.99 per litre, according to the RAC, with potential for further increases if diesel exports to the UK are curtailed. Ministers are particularly concerned about the possibility of former President Donald Trump impacting diesel supplies to the UK in an effort to lower prices domestically. This situation could push diesel prices to £3 per litre.

The government is also contemplating the reversal of a 5p-a-litre fuel duty cut, introduced by the Conservative party in 2022. Treasury sources have indicated that no definitive decisions have been made regarding these fuel duty adjustments. However, retaining the 5p cut alone would represent a significant fiscal impact, costing the Treasury an estimated £2.4 billion annually at a time when balancing the national budget is a pressing concern.

Under current proposals, fuel duty is slated to increase by 3p per litre on January 1, followed by an additional 2p increase on March 1. Furthermore, the Treasury is expected to end a 16-year freeze on fuel duty next year, adding another 1p in April. Including VAT, this would amount to a total increase of approximately 7.2p per litre, potentially adding nearly £4 to the cost of filling a family car.