UK government announces immediate 5p fuel duty cut
Chancellor Rishi Sunak announces saving measure in spring statement as cost of living spirals
The UK Government has announced a five pence per litre cut in fuel duty, in a bid to ease the impacts of the increasing cost of living in the UK.
Chancellor Rishi Sunak revealed the change during the government's annual spring statement on Wednesday. The cut will start from 6pm tonight and will last 12 months until March 2023.
It is hoped the cut will support drivers as fuel continues to command high prices. This is partly due to Russia’s invasion of Ukraine, which has driven up the price of oil.
Fuel prices have repeatedly hit record highs over the last few months. The latest figures from data firm Experian Catalist showed the average price per litre of petrol was 167.3p on Tuesday, while diesel was 179.7p.
“The Chancellor has ridden to the rescue of UK families and businesses who use their vehicles, not for pleasure, but to function in their daily lives,” said Edmund King, AA president.
“Since the start of the year, the 20p-a-litre surge in pump prices has been the shock that rocked the finances of families, and particularly young drivers, pensioners and lower-income workers who need to commute each day.”
The AA welcomed the cut, but suggested it would not go far enough unless forecourts adjust their pricing accordingly. The firm also noted that 43% of drivers were cutting back on car use, compared to around 59% of young drivers and 53% of those on lower incomes.
“We are concerned that the benefit will be lost unless retailers pass it on and reflect a fair price at the pumps,” King said. “Average pump prices yesterday hit new records- despite the fall in wholesale costs.
“On top of the duty cut, there has been a substantial reduction in wholesale road fuel costs feeding through to the forecourts since 9 March. That needs to drive lower pump prices also. The road fuel trade shouldn’t leave the Treasury to do the heavy lifting when cutting motoring costs.”
Similarly, the RAC also welcomed the 5p reduction, but said it will only “bring prices back to where they were a week ago,” calling the cut “a drop in the ocean.”
“With the cut taking effect at 6pm tonight drivers will only notice the difference at the pumps once retailers have bought new fuel in at the lower rate,” said RAC head of policy Nicholas Lyes.
“There’s also a very real risk retailers could just absorb some or all of the duty cut themselves by not lowering their prices. If this proves to be the case it will be dire for drivers. It also wouldn’t be totally unexpected based on the biggest retailers not reducing their prices late last year when the oil price fell sharply.”
A temporary VAT reduction would go further to support drivers at the pumps, the RAC added, adding that the treasury benefits from the high fuel prices.
