The freeze on fuel duty will continue into 2025 and the 5p-a-litre cut will stay for another year, Chancellor Rachel Reeves has announced.
The price of a full tank of petrol will remain the same following fears drivers would see a 7p-per-litre increase on average after today’s Autumn Budget.
Fuel duty has been frozen at 57.95p-a-litre since 2011. However, a 5p discount was put in force in March 2022 to help motorists cope with the sky-high cost of living crisis.
Jeremy Hunt, the previous Chancellor under the Conservative government, extended the cut in his spring budget until April 2025.
In a move that will come as welcome news to drivers today, Ms Reeves has kept fuel duty frozen for another year and maintained the 5p-a-litre discount.
The Chancellor said: ‘At a time when the fiscal position is so difficult, I have to be frank with the House that this is a substantial commitment to make.
‘I have concluded that in these difficult circumstances, while the cost of living remains high and with a backdrop of global uncertainty, increasing fuel duty next year would be the wrong choice for working people.’
Ms Reeves added: ‘It would mean fuel duty rising by 7p per litre. So, I have today decided to freeze fuel duty next year and I will maintain the existing 5p cut for another year, too. There will be no higher taxes at the petrol pumps next year.’
The freeze on fuel duty will continue into 2025 and the 5p cut will stay for another year, Chancellor Rachel Reeves 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
Prime Minister Keir Starmer previously refused to rule out that Labour would increase fuel duty, after warning some measure would be ‘painful’.
Pressure came from environmental campaigners who urged Ms Reeves to bring the cost of motoring in line with other forms of transport.
The Campaign for Better Transport said reversing the cut and reinstating an annual increase could bring in an additional £4.2billion in duty taxes.
Meanwhile, automotive group RAC backed an end to the 5p cut in fuel duty, claiming that motorists are not benefitting from the discount.
RAC head of policy Simon Williams told the Independent: ‘We’ve reached the conclusion the Chancellor has no option but to put fuel duty back up to 58p a litre in October’s Budget.
‘We’d normally be against any increase in duty, but we’ve long been saying drivers haven’t been benefitting from the current discount due to much higher-than-average retailer margins.’
Prime Minister Keir Starmer departs 10 Downing Street ahead of the Autumn Budget announcements today
But AA President Edmund King took a different view, in which he said: ‘Hiking fuel duty at the onset of winter is the worst possible time to do it.
‘It is when cold engines and increased use of heaters, wipers and lights send fuel consumption and costs shooting up.’
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.