Chancellor Rachel Reeves is set to ditch a 1p rise in fuel duty this week, and may cancel the planned 5p rise, which was due to happen over six months from September.
The U-turn is expected to be announced in the House of Commons this week, as part of a package of measures designed to head off a forecasted rise in inflation, triggered by the Iran War.
The Chancellor will announce she will not put up the tax by 1p which was set to happen in September, according to government sources, and may cancel all of a 5p rise that is due to happen in stages over the subsequent six months.
The move, which was first reported in The Sun, follows concerted industry lobbying from the RHA and Logistics UK, in response to spiralling fuel prices since the start of the Iran War, which have seen an increasing number of haulage firms founder over the past few weeks.
Earlier this month, RHA reported that, compared to mid-February; a typical van with an 80-litre tank costs £150 to fill, up from £110 - a £40 increase, whilst the cost for an HGV with a 600-litre tank has risen from around £850 to £1,150 – an extra £300 per vehicle every single fill.
The RHA wants a package of measures from the government, which includes no increase in fuel duty in September; an Essential User rebate; no link between fuel duty and inflation from April 2027; and fair payment terms to support cashflow across the sector.
Ben Fletcher, Logistics UK chief executive, also called for urgent government action on the cost of fuel this week. He said Logistics UK members were suffering from the rising cost of fuel.
“With most logistics businesses operating on very narrow margins and unable to absorb this level of increase, we have made clear to government that the impact is likely to be higher inflation for everyone.
“The rise in fuel prices has already benefitted the Treasury to the tune of £42m in increased tax take since the end of February, so it is right that the government now reverses its decision to increase fuel duty, which would provide a welcome boost to our industry at such a tough trading time, as well as helping to reduce price rises on the shelves,” he added.
Fletcher also warned the cost of fuel could hamper the industry’s ambitions to decarbonise in line with the government’s Net Zero targets.
He said: “With so little financial headroom, rising fuel prices mean logistics businesses are being forced to prioritise business-as-usual costs over investing in future growth and a transition away from fossil fuels.
“What our members need is an urgent package of support from government, including measures on fuel duty, low carbon fuels, electricity costs and business rates, to ensure they can keep our hospitals stocked with medicines, our shops with food and our homes with access to the goods we rely on every day.
“Our industry cannot survive ever-escalating costs, so it is time for the government to step in, to ensure we can still deliver for the wider economy for the long term.”
Tomorrow, the lobby group FairFuelUK, supported by a number of opposition MPs, will deliver FairFuelUK’s petition to the Treasury, calling on the Chancellor to confirm the freeze on fuel duty and maintain it for the lifetime of this Parliament.
The 150,000-signature petition also urges Rachel Reeves to cut fuel duty immediately amid the cost-of-living crisis, as 40 other countries have already done since the conflict in Iran began.
Howard Cox, FairFuelUK founder, said: “A solution to significantly stimulate economic growth is staring the Chancellor full in the face,” adding, “I call upon the Treasury to wake up, smell the coffee, and use economic common sense by cutting fuel duty and keeping it frozen for the lifetime of this parliament.
“Give drivers a break by cutting the cost of filling up now, not next week, do it now, and make the economy flourish as a result.”
The Treasury has declined to comment on the Chancellor’s plans for fuel duty.
