UK Chancellor Reeves cancels planned fuel duty rise to ease cost of living
Chancellor Rachel Reeves will cancel a planned 1p rise in fuel duty due in September and may scrap all of a 5p increase scheduled over six months, government sources said. The move is part of a wider package to mitigate inflation driven by the war in Iran, which Reeves is expected to announce to the Commons on Thursday. The Treasury declined to comment, while the prime minister’s spokesperson said the government is determined to keep costs down for motorists.
Chancellor Rachel Reeves will cancel a planned 1p rise in fuel duty due in September and may scrap all of a 5p increase scheduled in stages over six months, government sources said, as part of a wider package to mitigate inflation driven by the war in Iran.
Reeves is expected to announce the plan to the House of Commons on Thursday. The Treasury declined to comment on the proposals, which were first reported by the Sun on Sunday.
The prime minister’s spokesperson said: “The government is determined to keep costs down for motorists paying more because of the war in Iran. That’s why we’ve extended the 5p fuel duty cut twice, until September. While the chancellor will continue to monitor the situation, as the chancellor has set out, a rapid de-escalation in the Middle East remains the best way to keep pump prices low.”
The 5p fuel duty cut was first announced by then-Chancellor Rishi Sunak in 2022 after Russia’s invasion of Ukraine. Reeves announced at the last budget that she would freeze fuel duty for nine months but would begin ending the temporary 5p cut this September. Extending the 5p cut would cost the government an estimated £2.4bn a year.
Richard Walker, executive chair of supermarket chain Iceland and the government’s cost of living champion, said on BBC Radio 4’s Today programme: “The 5p fuel duty cut that you allude to is an interesting one. That’s going to expire in September. I think, given where we are, we do need to be thinking and talking about extending it or enlarging it.”
Reeves has already allocated £50m to subsidise heating oil for families who use it to heat their homes, many of them in rural areas and Northern Ireland. Government sources said that because energy usage is lower in winter, the chancellor wants to wait until later in the year before deciding how much to spend on subsidising bills. Officials said a freeze on private sector rents has been ruled out, and Reeves is expected to wait until later in the year to announce an energy bill relief package, given that the level of the price cap has been fixed until the end of June.