Prime Minister Keir Starmer has confirmed the government will extend the temporary 5p cut in fuel duty until the end of the year, alongside a 12-month vehicle tax holiday for the haulage industry, in a move welcomed by operators facing soaring fuel costs linked to the conflict in Iran.
The announcement, made during Prime Minister’s Questions today (20 May), comes ahead of a wider package of economic measures expected from Chancellor Rachel Reeves tomorrow.
The extension means the planned reintroduction of the 5p fuel duty increase, originally scheduled to begin in September, has been postponed. However, the Treasury has not yet confirmed whether the rise will still go ahead from January 2027.
Starmer told MPs the measures were designed to ease pressure on households and businesses as fuel prices continue to rise.
“We are giving our hauliers a 12-month vehicle tax holiday, helping to keep prices down, and we are backing drivers by extending the freeze in fuel duty for the rest of the year,” he said.
The government said the fuel duty freeze would save the average driver around £120 over two years by the end of 2026, while the vehicle excise duty relief would save a typical HGV operator around £600 per truck over the next 12 months.
The measures follow sustained lobbying from industry groups including the RHA and Logistics UK, which have warned that rapidly rising fuel prices are placing unsustainable pressure on operators already working on tight margins.
Responding, RHA MD Richard Smith, said: “We are encouraged that the government is listening to industry concerns, and addressing cost pressures through measures they’ve announced today. But they should go much further.
“We acknowledge the extension of the fuel duty freeze from September to December, and a temporary cut in red diesel which will reduce some costs for operators in the agricultural sector. It’s good to see that the Chancellor is listening after we and other industry groups have long campaigned against fuel duty increases.
“A one-off 12-month HGV VED ‘holiday’ will offer some relief, but overall the Government’s action will have limited impact with many haulage, coach and van operators already on the brink.
“We are seeking clarity from the Chancellor on further measures she could introduce to significantly ease the pressure on businesses. In the longer term we urge her to decouple fuel duty from RPI which is planned to start next April which will see prices rise again.
“But the immediate picture is far more pressing. Cashflow is a huge challenge for transport operators against a backdrop of cost pressures, low margins, and the high rates of insolvency plaguing our sector.
“Businesses need help now. Our recent fuel survey revealed that only 10 percent of operators can pass on all the fuel cost increases they’re taking on as the price of diesel has soared by 35 percent.
“It’s never been more critical. This is why we urge the Chancellor to introduce an immediate essential user rebate – similar to schemes elsewhere – that would help haulage, coach and van operators substantially reduce their bills, and relieve inflationary pressures across the economy.”
Earlier this month, the RHA said the cost of filling a typical 600-litre HGV fuel tank had risen by around £300 compared with prices in mid-February.
Logistics UK chief executive Ben Fletcher previously warned that operators were struggling to absorb the increases and said continued cost pressures risked fuelling wider inflation and delaying investment in decarbonisation.
The Treasury said further details on how the support package will be funded will be outlined by the Chancellor later this week.
