Keir Starmer’s cost of living champion Lord Richard Walker’s intervention will pile pressure on ministers to extend the fuel duty cut amid a rise in pump prices due to the Iran war
Keir Starmer’s cost of living champion has said the government should consider extending or even increasing the 5p fuel duty cut as the Middle East crisis deepens.
Iceland boss Lord Richard Walker’s intervention will pile pressure on ministers to step in because of the rise in pump prices due to the Iran war.
Chancellor Rachel Reeves extended the 5p per litre cut in fuel duty – introduced after Russia’s invasion of Ukraine in 2022 – at last year’s Budget until August 2026. But it will expire in September and be gradually phased out by March 2027.
Lord Walker told BBC Radio 4’s Today programme on Friday: “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.
“Interestingly, the Australian government, I was reading, have recently taken 14p per litre cut to their fuel tax. I mean that this cut is 5p.”
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Lord Walker was also asked about Tory peer Lord Simon Wolfson’s comment that the Treasury must not end up profiting from the Iran war, and could help businesses and consumers by adjusting duty on fuel to help ease immediate cost pressures.
Next chief executive Lord Wolfson last week said the Government would be taking higher tax in fuel duty because of the spiking prices, and could “balance the books” by bringing it down to ensure the tax take remains the same. Labour peer Lord Walker said: “Lord Wolfson is a great guy and very intelligent, and he might have a point there.”
The Prime Minister and Chancellor have said this is being kept under review amid the spiralling US-Israeli war with Tehran and the effective closure of the Strait of Hormuz – one of the world’s most vital oil shipping routes. Earlier this week, Ms Reeves insisted the government is preparing for “all eventualities”.
She said: “We are monitoring very closely what’s happening – trying to bring the oil and gas into the UK so that those supplies are there and get the prices down. We are monitoring the situation very carefully. We are preparing – as you would expect me to be – for every single eventuality to make sure there alongside people, standing beside them, keeping costs down for everyone.”
Ms Reeves also dismissed the idea of a “tax windfall” for the Treasury amid a spike in prices at the pump as “for the birds”. Earlier this week, the Times reported the government is raking in an extra £20million a day in extra revenue though taxes linked to the price of oil and gas.
But at the same time the cost of government borrowing has soared. The Chancellor said today: “Let’s be clear since Trump started this war cost which we disagree with the cost of borrowing for government has gone through the roof.
“The revenues were likely to get through on income tax and capital gains tax are likely to come down because the economy is likely to be weaker. So the idea there’s any windfall coming to the Treasury – that’s just for the birds.”