Rishi Sunak hints at fuel duty reduction in spring statement to tackle record fuel prices
Fuel prices have hit an all-time high again as speculation grows that Rishi Sunak is planning to cut fuel taxes.
Figures from Experian Catalist show the average price of unleaded hit 167p on Sunday, an increase of 18p month on month. Diesel rose by 26p to an average of 179p per litre.
Chancellor Rishi Sunak has hinted he is ready to cut fuel taxes ahead of his spring statement on Wednesday March 23. Speaking on Sunday, he highlighted his position as an MP for a rural area – Richmond in North Yorkshire – with car-dependent voters. Fuel, he said, is “one of the biggest bills people face”.
Read more:Who can get a fourth Covid shot
The Tory Chancellor told Sky News’ Sophy Ridge On Sunday: “Obviously I can’t comment on specific things (that will be in the spring statement).
“But what I would say, I understand that… I have a rural riding, people are incredibly dependent on their cars and that’s one of the biggest bills people face, watching it go up.
“We all see this when we fill up our cars.
“I get it, that’s why we’ve already frozen fuel taxes.”
Gordon Balmer, executive director of the Petrol Retailers Association, which represents independent forecourts, said companies “don’t want to charge” record prices because “many of our members know their customers personally”.
He told Sky News developments in oil prices could see fuel hit the 200p per liter mark. He added: “We hope not, but it’s obviously very difficult to predict at the moment.”
AA spokesman Luke Bosdet accused retailers of failing to pass on the recent drop in wholesale oil prices.
He said: “Wholesale petrol and diesel prices began to fall dramatically on March 9, but more than 10 days later pump prices continue to set new records.
“Even with oil rebounding to US$110 a barrel at the end of last week, wholesale petrol on Friday was down 12 pence a liter from the March 8 peak.”
Often prices at the pump drop after one of the supermarkets lowers theirs. But that hasn’t happened yet, says Mr. Bodset.
He said: “Before the pandemic, retailers would sit on lower cost savings and wait for Asda or Morrisons to announce price cuts and then start lowering their prices.
“Now that that competitive push has largely subsided, drivers and businesses desperate for the financial relief of lower prices at the pump must continue to struggle.”
RAC fuel spokesman Simon Williams said “the window for lower prices at the pump appears to have been well and truly closed” as oil prices and wholesale fuel costs rise. But a 5p cut in duty might not be enough to “make a real difference”.
He added: ‘On the other hand, reducing VAT, which is a tax on a tax, prevents this from happening and would ensure that drivers benefit fully.’
Fuel tax is currently levied at 57.95 pence per liter for petrol and diesel. VAT is charged at 20% on top of the total price.
Labor will vote for a reduction in fuel taxes, but are also calling for more drastic measures. Shadow Chancellor Rachel Reeves said a 5p fuel tax cut would ‘only reduce filling the car with petrol by £2’, which doesn’t do enough in the face of the cost challenges of the life.
Head here for the latest cost of living news