Fuel duty is set to be increased next year and will climb each year after that in line with inflation.
Although chancellor George Osborne did not mention fuel duty in his Autumn Statement yesterday (25 November), effectively maintaining the status quo that has meant no duty rises in five years, this looks likely to end next April.
Within the Spending Review document is a forecast that fuel duty revenue will increase by £2.3bn from 2015/16’s level of £27.4bn to £29.7bn in 2020/21.
The Office for Budget Responsibility (OBR) has confirmed this is based on "the assumption" that standard government policy is to uprate fuel duty rates in line with the Retail Price Index (RPI) inflation each year from April 2016. In the absence of a statement to the contrary from the chancellor - who cancelled the increase due for September 2015 in his July Budget - fuel duty will begin to increase from April next year.
The OBR has also forecast in the document that RPI will increase from 1% presently to 3.2% by 2020/21.
Howard Cox, head of the FairFuelUK campaign, said: “The bucket loads of independent economic evidence in front of the chancellor indisputably shows falling pump prices increase consumer spending.
“And yet, he will ignore all of that and stupidly intends to put up duty in 2016 by RPI and bring the fruitful 5-year freeze to an end.”
Cox said the UK already levied the most punitive fuel tax in continental Europe. “Putting it up in a time of low inflation is economic suicide and will madden businesses and drivers in their millions and put fiscal growth at colossal peril,” he added.
