Fuel-duty hike would be road to ruin for drivers
WITH war raging in the Middle East, Chancellor Rachel Reeves is poised to declare hostilities on British motorists. Fears are mounting that havoc on the oil markets caused by the US-led attack on Iran will translate to higher pump prices here.
The escalating conflict in the Middle East could see crude oil prices spike to $130 per barrel if the Strait of Hormuz, which handles about 20% of global oil supply, faces prolonged disruptions, with the potential to trigger a 1970s-style energy shock.
A sustained rise could add 10-20p per litre to petrol and diesel within weeks – similar to the surges seen in 2022 after the Ukraine invasion.
The global uncertainty is sure to be seized upon as an ideal opportunity for Ms Reeves to scrap a fuel-duty freeze.
The Chancellor and Treasury pen pushers have been long itching to punish the UK’s 37 million drivers at the pumps to appease net-zero zealots. Now they have the perfect excuse.
Although pump prices vary wildly across Britain, the average for unleaded petrol is now 134p per litre, while diesel is 142p.
Tomorrow’s spring statement could set the scene for painful forecourt rises, with more to follow in the autumn Budget.
Experts fear the hike could be as much as 10p – which would signal a reversal of former prime minister Rishi Sunak’s 5p Covid cut, maintained in subsequent Budgets, plus an additional 5p per litre.
But such a move at a time of unprecedented squeezes on household budgets would be foolhardy and shortsighted, as it would further impede economic growth.
In the UK, drivers face a double whammy at the pumps, with fuel duty – a form of excise tax – levied at a flat rate of 52.95 pence per litre for both petrol and diesel.This rate has been frozen since 2011-12.
In addition to fuel duty,VAT is also charged on both the product price and the duty at a rate of 20%.
By keeping the fuel-duty freeze, Ms Reeves would provide some much-needed political relief to a government known for frequent U-turns and alleviate inflationary pressures.
But if the regressive tax is raised, filling up an average family car would cost an extra £6.60, a typical Transit van another £20 and a large HGV an additional £70.
And drivers – the backbone of Britain, but for so long a cash cow to be endlessly milked – will really know they. are on the road to nowhere under this government.