Rachel Reeves to scrap gas obligation improve in main price of dwelling announcement
Chancellor Rachel Reeves is poised to announce that she is retaining the fuel duty cut as part of a wider package of cost of living measures to help families and businesses
Petrol prices have already risen sharply on the back of the escalating Middle East conflict(Image: ANP/Shutterstock)
Rachel Reeves will ditch a planned hike to fuel duty this week as part of a blitz on cost of living pressures triggered by the Iran war.
The Chancellor announced in the Budget in November that she would phase out the temporary 5p cut to fuel duty from September, which was first applied in 2022 after Russia invaded Ukraine.
But she is now expected to shelve the plans as prices rise at the pumps in the wake of the closure of the Strait of Hormuz, a critical waterway for around a fifth of the world’s oil and gas.
Ms Reeves will announce she is retaining the cut on Thursday as part of a wider package of measures to help families and businesses, the Mirror understands.
It comes after we revealed that No10 and the Treasury were drawing up plans to help with the cost of living as the Government battles to get on the front foot in the aftermath of Labour’s local elections disaster.
READ MORE: Student nurses cutting back on food and bills as lifetime of debt fears growREAD MORE: Andy Burnham sets out battle line over Brexit after Wes Streeting’s rejoin EU call
The Prime Minister’s spokesperson declined to comment on tax plans, but 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.
“And while we 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. We will also take the necessary decisions to help families with the cost of living and protect the public finances.”
The Chancellor has been under intense pressure to ditch the fuel duty rise as the economic fall-out from the Middle East conflict hits Brits through higher inflation, food cost and petrol prices.
Separate plans to help low income families with rising energy bills are expected to come later this year. Government insiders are concerned about a spike in household bills but Ms Reeves wants to see how much prices could rise before deciding on the scale of her intervention.
Ofgem will announce its latest price cap from July 1 on May 27, based on factors like wholesale costs, which have jumped due to the war in Iran.
Industry experts Cornwall Insight currently forecast that the cap, covering some 33 million customers on standard variable tariffs, will rise from around £1,641 a year to around £1,843 a year from July 1.
The Government has allocated £50m to subsidise rocketing heating oil costs, which families in rural areas, especially in Northern Ireland, use to heat their homes.
