Fuel duty cut ‘must be more than 5p’ to reverse soaring costs
Calls for reduction to go further than rumoured as prices jump by more than 10p per litre in just two weeks
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Cutting fuel duty by 5p per litre will not counter even half of this month’s fuel cost rises, according to the latest figures.
Amid rumours that the Chancellor plans to temporarily reduce the levy in his Spring Statement, there have been calls for him to go further than the hinted-at 5p reduction.
The latest figures from the Department for Business, Energy and Industrial Strategy (BEIS) show the average price of a litre of petrol increased by 12.4p from 153p on 7 March to a record 165.4p on Monday, with diesel rising by 18.9p to 177.5p on Monday.
Rishi Sunak is widely expected to announce a cut in the fuel duty from its current 57.95p per litre to ease pressure on drivers but Steve Gooding of the RAC Foundation says a 5p reduction doesn’t go far enough.
Referring to the BEIS statistics, he commented: “These official figures show why a fuel duty cut is needed and why it should be more than the 5p per litre that has been reported.
“The Chancellor will have been benefiting from a rise in VAT income given the pump price increases, so he could afford to give something back to road users.
“Nor should he fear that a temporary cut in duty will lead to an increase in driving. With the current squeeze on household budgets, there won’t be many people rushing to do extra mileage even if there is some limited relief on the forecourts.”
Fuel prices have rocketed since the Russian invasion of Ukraine and separate figures from the RAC and data firm Experian Catalist, which both use different methodology, put the latest forecourt prices even higher than the government figures.
Experian Catalist put Monday’s prices at 166.6p for petrol and 178.7p for diesel, while the RACs’ Fuel Watch reported prices of 167p and 178.93p respectively.
Fuel duty along with VAT currently make up 52% of the forecourt cost of a litre of petrol and 50% diesel. A 5p per litre reduction could cut the cost of filling an average family car by around £2.75.
Based on the RAC’s figures, petrol is now 42p per litre more expensive than it was a year ago and diesel is 51p more.
The UK’s reliance on diesel from Russia is thought to be partially to blame for the sharper increase in its cost compared with petrol.