There was relief among motoring organisations this week after fears of a fuel tax increase in the spring budget turned out to be unfounded. The RAC said Chancellor Rishi Sunak’s decision to maintain the freeze on fuel duty would lead drivers to “breathe a sigh of relief”, while car buying comparison site Carwow described the move as “positive”.
Sunak’s decision now means it has been a decade since fuel duty was last increased, with the current freeze initiated by George Osborne in 2011. However, even with the Conservatives’ measures, fuel duty still accounts for almost 58p of the price drivers pay for a litre of petrol or diesel.
“Right now, to keep the cost of living low, I'm not prepared to increase the cost of a tank of fuel,” said Sunak as he addressed the House of Commons. “So the planned increase in fuel duty is also cancelled.”
But while the continued freeze means tax won’t increase, there can be no guarantees that fuel prices won’t rise. According to the RAC’s Fuel Watch initiative, prices have risen noticeably in recent months, with an average tank of fuel costing around £5 more at the end of February than it did at the beginning of November.
Nevertheless, the RAC said the continued freeze would be a welcome measure for motorists who are already being hit in the pocket by rising oil prices.
“Drivers will breathe a sigh of relief that the Chancellor has decided not to rock the fuel duty boat,” said RAC head of policy Nicholas Lyes. “We feared this would only pile further misery on drivers at a time when pump prices are on the rise and many household incomes are being squeezed as a result of the pandemic.
“Many drivers see their cars as a safe way to carry out essential journeys and believe having access to a vehicle is even more important as a result of the pandemic. If the Chancellor had raised fuel duty, he could have risked choking any economic recovery as it would have led to increased costs for consumers and businesses.”
The Petrol Retailers Association (PRA), which represents petrol stations, also welcomed the announcement, claiming its members had “kept the country moving” during the coronavirus pandemic.
“As the PRA has campaigned heavily against any rises in fuel duty, we naturally welcome the Chancellor’s decision,” said PRA chairman Brian Madderson. “Fuel duty is a regressive tax on business and livelihoods so any attempt to increase it would have been entirely counter-productive as the economy gets back on track.”
But the move wasn’t welcomed universally, with climate group Friends of the Earth claiming the government should be taxing cars more, not less.
“It’s astonishing that a government pledging to confront the climate emergency has frozen fuel duty yet again,” said Friends of the Earth’s head of policy, Mike Childs. “No wonder passenger cars’ contribution to the climate crisis has barely fallen in the past decade.
“The sale of gas-guzzling SUVs are a particular concern, as they have helped drive a rise in average emissions from new cars in the last five years. Rishi Sunak should be doing more to discourage the purchase of these polluting vehicles - such as slapping a significant increase in road tax on them.”