Rachel Reeves today froze fuel duty for another year in a huge boost for Britain’s more than 30 million drivers.
The Chancellor said the move was a ‘substantial commitment’ because it will cost the Treasury around £3billion.
But she said the decision was the right thing to do for workers who rely on their vehicles to make ends meet amid ‘these difficult circumstances, while the cost of living remains high’.
The move was hailed by motoring groups and means that fuel duty has now been frozen for 15 years in a row, after the previous Tory administration kept it the same for 14 years.
The Chancellor confirmed that the 5p-a-litre cut to the levy, introduced by former Prime Minister Rishi Sunak in 2022 amid soaring global oil prices, will also remain in place.
The freeze on fuel duty will continue into 2025 and the 5p cut will stay for another year, the Chancellor has announced (Stock photo)
Chancellor of the Exchequer Rachel Reeves leaves 11 Downing Street with her ministerial red box before delivering her Budget in the Houses of Parliament today
The Fuel Duty Escalator, under which fuel duty is supposed to rise in line with inflation, will also remain frozen for another year until April 2026.
It means the levy will remain 52.95p a litre. Had the 5p cut been reversed and the escalator used, it would have added nearly £4 to the cost of a fill-up, or more than £90 a year to the average families’ petrol bills.
The RAC’s head of policy Simon Williams said: ‘It’s good to see the Government firmly recognising the importance of the car to millions of households up and down the country.
‘Eight-in-10 drivers tell us they are dependent on their vehicles for the journeys they need to make, while 70% of commuters who live in rural areas have no other feasible alternatives to get to work beyond taking the car.
‘It’s also worth remembering that even as of today 56% of the total price of a litre of petrol is already tax in the form of fuel duty, and the VAT that is charged on top.’
Fuel duty is often seen as a stealth tax on workers, who are forced to pay for it to get to jobs in their vehicles.
Raising it can also send the price of goods in stores and supermarkets rising because it can increase the cost of deliveries for hauliers and delivery firms.
It also clobbers self-employed tradespeople, potentially sending the cost of services such as home improvements rising.
Ms Reeves had been under growing pressure from Treasury officials who believed a fuel duty hike was long overdue.
The 5p cut was first introduced by former Prime Minister Rishi Sunak in 2022 amid soaring global oil prices sparked by Russia’s invasion of Ukraine.
Prime Minister Keir Starmer departs 10 Downing Street ahead of the Autumn Budget announcements today
At the time, average petrol and diesel prices at the pumps hit more than 190p a litre. They are currently around 135p and 140p a litre.
Ms Reeves was also being pressured to allow the Fuel Duty Escalator to rise in line with inflation.
Previous Tory administrations froze this for 14 consecutive years in a tax cut worth at least £80billion to drivers collectively.
A recent AA survey found that the cost of filling up is a major concern for nearly half of drivers.
This was second only to the deteriorating state of the roads (71 per cent).
Edmund King, AA president, said: ‘In this eve of Halloween budget, the Chancellor has conjured up a treat for drivers.
‘Drivers have been in suspense since the Chancellor announced there would be painful taxes to fill the Treasury’s ‘black hole’. They knew they were on the cast list to be victims but have escaped that threat.
‘Drivers were worried that pre-Budget scares of hiked fuel duty may end in a nightmare, but the Chancellor has pulled off the ultimate trick and treat.
‘Since covid and the start of the Ukraine war, ‘perma-high’ pump prices have inflicted road fuel costs that were well above anything motorists had endured before. Today’s fuel duty freeze will be a big relief.’
Howard Cox, Founder of FairFuelUK, said: ‘I am delighted that Rachel Reeves has listened to FairFuelUK supporters and her Party MPs’ constituents.
‘She finally recognises that keeping Fuel Duty frozen is at the core of a laudable journey to economic growth.’
The feared increase would likely have come as another unwelcome hit to motorists who are still struggling from the ongoing cost of living crisis.
Earlier this month, analysis by the TaxPayers’ Alliance showed Britain already had the highest duty on diesel and is ninth highest for petrol, compared with EU countries.
