The Labour Government has confirmed that the fuel duty rate will be frozen for 12 months in an unexpected October Budget U-turn.
In her first budget, Chancellor Rachel Reeves established a rise in fuel duty (Image: SkyNews)
Chancellor Rachel Reeves has confirmed that fuel duty will remain at the same rate for the next 12 months, increasing the cost of petrol and diesel at the forecourts.
The Labour Government’s first budget was set to be ‘painful’ for many Brits, with many motoring experts predicting tax rises that would leave drivers out of pocket.
However, announcing the budget in the commons, Reeves noted that hiking the tax paid by millions would have been the wrong choice in the wake of the cost-of-living crisis.
She explained: “I want to set out my approach to fuel duty, baked into the numbers I inherited from the previous Government is an assumption that fuel duty will rise by RPI next year and the temporary 5p cut will be reversed. To retain the 5p cut and to freeze fuel duty again would cost over £3b next year. At a 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 the 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 decided today 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.”
The freeze means the cost of petrol and diesel will likely remain stable (Image: Getty)
Fuel duty, the tax which is paid on sources of energy, has stood at 52.95p per litre of petrol and diesel since early 2022, when the previous Conservative Government cut the price by 5p to reflect rising oil prices.
However, with more electric vehicles on the road, the amount of revenue the Government receives from fuel duty has gradually decreased in recent years.
As a result, many motoring experts expected that fuel duty would rise in the budget in a bid to cut the £22 billion ‘black hole’ to public finances reported by the party.
The revenue received from fuel duty has fallen in recent years, with more drivers switching to EVs (Image: Getty)
Prior to the October Budget being announced, Edmund King, President of The AA, warned that rising fuel duty in late autumn would have impacted drivers more, with cars typically getting worse economy figures during this time of year.
He advised: “Hiking fuel duty at the onset of winter is the worst possible time to do it.
“It is when cold engines and increased use of heaters, wipers and lights send fuel consumption and costs shooting up.”
