Chancellor urged to freeze fuel duty after OBR warns petrol could rise by 12p a litre

Politics

There are calls for the chancellor to commit to a further freeze of fuel duty after a forecast from the Office for Budget Responsibility said 12p a litre would be added to pump prices if the government did not act.

Fuel duty was not mentioned by Chancellor Jeremy Hunt in his autumn statement earlier, but the fiscal watchdog’s document says it assumes there will be an increase in the spring.

The “planned 23% increase” would likely see the price of petrol and diesel rise by around 12p a litre, the OBR said, boosting government coffers by £5.7bn.

It would be the first time a government has raised fuel duty in cash terms since January 2011.

Tory MP Jonathan Gullis – who wants fuel duty to be cut further – has written to the chancellor, calling on him to “listen to motorists, van drivers and truckers, who are already being smacked hard with cripplingly high taxation” and prove to them the government “actually have their backs by keeping the price at the pump down”.

Fair Fuel UK founder Howard Cox said the “bombshell” had been “snuck away”, adding: “Needless to say, I’m loading both barrels to fight this tooth and nail”.

Fuel duty has been frozen at 52.95p a litre since 2011 and it was cut by 5p a litre in the spring statement last year, a measure due to expire at the end of March.

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The 23% figure comes from combing the forecast for RPI (retail price index) inflation next year and the assumption that the 5p cut will end.

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RAC head of roads policy Nicholas Lyes: “As things stand, drivers will face an enormous hike in the cost of fuel next spring due to fuel duty going up.

“The OBR expects to see 12p added to a litre of fuel, as a result of the current 5p duty cut coming to an end combined with its scheduled rise – something that’s not been seen for over a decade due to duty being frozen in successive budgets.

“The government has always made a big deal of cancelling duty rises in the past and will face colossal pressure to do the same next year – after all, a rise of these proportions would heap yet more misery on the millions of households that depend on their vehicles, most of whom will just endured one of the costliest winters on record.

“Instead, we urge the government to focus on giving serious thought to developing a fair taxation system that can eventually replace fuel duty, which is effectively on borrowed time given the numbers of zero-emission vehicles on the roads that pay no fuel duty whatsoever.”

The OBR warning comes just a day after 23 Conservative MPs – including former home secretary Priti Patel and former Northern Ireland secretary Brandon Lewis – wrote to the chancellor, calling on him to cut fuel tax.

Speaking after the autumn statement, fellow Tory Craig Mackinlay said: “It would be beyond ridiculous to give a generous lift to benefits and pensions simply to take it away in an inflation busting fuel duty rise.”

A Treasury spokesperson said: “The 23% figure came from the OBR, not the Treasury. It is based on forecasts that are subject to change.

“We have not announced anything on fuel duty today – the existing 5p cut will remain in place until March 2023 (a tax cut which is worth £2.4bn), and final decisions on fuel duty rates will be made at the spring budget.”

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