If you thought your fuel costs were already burning a hole in your pocket, hold onto your wallets because it looks like the heat is about to be turned up. The word on the street is that the Government's Autumn Budget in the United Kingdom is gearing up to give us all a little less bang for our buck – or rather, a little less mileage for our money. And who’s behind the wheel of this potentially bumpy ride? None other than our new Prime Minister, Sir Keir Starmer, who’s facing down a whopping £22 billion-sized financial pothole.
As Sir Keir plots his course to fill this fiscal void, it's up to Chancellor Rachel Reeves to figure out where the money is going to come from. And let’s just say, fuel duty is sitting in the crosshairs. This duty, in case you need a refresher, is that pesky tax you pay on every litre of petrol and diesel, sneakily tucked into the overall price at the pump. The goal? To keep the government's coffers brimming.
Now, in a bit of history that might make you nostalgic for the "good old days," the fuel duty rate has been stuck at 57.95p per litre since March 2011. That is, until the Conservatives gave us a brief reprieve in March 2022 with a 5p per litre reduction. But let’s not get too comfortable – those savings might be on the chopping block.
Fuel prices in the UK:
The RAC is sounding the alarm. The organisation has been urging retailers to cut petrol and diesel prices to better reflect the lower wholesale costs they’re enjoying. According to their calculations, we should be seeing petrol at around 136p per litre instead of the current average of 142p, and diesel should drop from 147p per litre to 139p. But, as it turns out, retailers have been pocketing a little extra, with their margins creeping up to 10p per litre, instead of the usual 8p. Sneaky, right?
Simon Williams, the RAC’s head of policy, isn't pulling any punches. He suspects Chancellor Reeves will have to bump fuel duty back up to 58p per litre to plug that pesky £2bn hole in the Treasury’s budget. He also pointed out that the £1.6bn overcharge last year isn’t exactly helping our case. Williams believes it’s time for the Government to switch gears and consider a pay-per-mile system, especially as electric vehicles (EVs) become more common.
For those keeping score at home, the current average fuel prices in the UK are hovering around 150p per litre for petrol and 155p per litre for diesel as of September 2024. So, if this budget plan goes through, expect a bit more groaning at the petrol station.
Source: RAC