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Autumn Budget 2021: Fuel duty rise axed

Chancellor Rishi Sunak has confirmed that the planned fuel duty rise for 2022/23 due in today’s Budget will be scrapped for a 12th successive year.

The widely anticipated announcement in today’s Budget means fuel duty will be held at 57.95 pence per litre, staving off the planned 2.8ppl rise

The widely anticipated move means fuel duty will be held at 57.95 pence per litre, staving off the planned 2.8ppl rise and at a loss of £1.5bn to the Treasury.

Government figures show the continued fuel duty freeze has saved the average UK car driver a cumulative £1,900, compared to the pre-2010 escalator.

The announcement comes after many organisations had lobbied for a further fuel duty freeze, in particular after fuel prices hit a new record high at the weekend. And with the cost of a barrel of oil continuing to rise – it’s already more than doubled in the last year – further fuel prices are predicted in the coming weeks.

Speaking earlier this week, the Petrol Retailers Association (PRA) warned that with pump prices at an eight-year high, any further tax rises would increase the inflationary basket for households, and as a result would lead to pressure on interest rates.

PRA chairman Brian Madderson had said of fuel duty: “It is a regressive tax which hits poorer families and rural dwellers the hardest as road fuel is an absolute necessity for so many. It could also make government borrowings more expensive to service and even restrict their financial flexibility as we go forward.

“The global energy markets are in turmoil at present as we all try to recover quickly from the effects of the pandemic on our economies, and the UK is not immune from such pressures.”

Following today’s announcement, Madderson welcomed the confirmation of the continued freeze as he highlighted how motorists are being hit by record prices: “The cost of filling the typical 55-litre tank in a family car is now £20 more than it was in May 2020, when the average petrol pump price plunged to 106.48p a litre in lockdown. The typical motorist fills up twice a month, meaning fuel bills have increased by around £40 a month over this period.”

The RAC also welcomed today’s confirmation of a further fuel duty freeze.

RAC fuel spokesman Simon Williams said: “With pump prices at record highs, now would have been the worst possible time to change tack and hike up costs still further at the forecourt. If duty had gone up, RAC data suggests the average price of a litre of petrol could have reached 147p, taking the cost of a tank to over £80, and diesel an eye-watering 150p.”

But the RAC said it was disappointed that calls for a VAT cut on fuel had not been heeded, which would have provided more effective respite for drivers at the pumps.

Williams added: “As VAT is charged on the final cost at the pumps, a temporary cut in VAT to motor fuels would have benefited drivers immediately at time when filling up the car is hurting household budgets more than ever before as well as the wider economy as people will have less money to spend.”

And the FairFuelUK campaign said an opportunity had been missed to actually cut fuel duty: “With pump prices at their highest ever, meaning the Treasury is wallowing in a £1bn unexpected windfall, it was a time for the Government to have cut fuel duty significantly. It was a time too, to incentivise drivers to move to cleaner fuels and put a moratorium on the 2030 ban on new diesel and petrol car sales, until more cleaner fuel technologies come forward.”

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Natalie Middleton

Natalie has worked as a fleet journalist for nearly 20 years, previously as assistant editor on the former Company Car magazine before joining Fleet World in 2006. Prior to this, she worked on a range of B2B titles, including Insurance Age and Insurance Day.