Reports that the government is planning to extend the freeze on fuel duty and the 5p cut in the price of petrol and diesel in this year’s Budget have been welcomed by the haulage industry.
According to a report in The Times, Chancellor Jeremy Hunt believes there is a 'strong precedent' to extend the cut on petrol and diesel in the Spring Budget, should the public finances allow such a move.
A source close to the Chancellor told the Times Hunt is also facing pressure to freeze fuel duty for another year. The source said any plans to add costs to motorists would be “politically toxic”.
However, the decision on whether to push ahead with the two measures - which would cost a total of £6bn - is dependent on inflation falling and economic growth recovering, according to the source.
“He keeps telling colleagues the best tax cut for people is a cut in inflation. But the Tories have also frozen fuel duty for a decade, so he gets that it's a strong precedent to follow, albeit bloody expensive,” the source added.
Rishi Sunak cut fuel duty by 5p in March last year, when he was Chancellor, as the impact of the Ukraine war saw pump prices rise sharply. If the cut is not extended in this year’s Budget on 15 March fuel duty could rise by up to 25%.
THe RHA welcomed any move to continue the freeze on fuel duty. In a statement the association said continuing the freeze would not only help its members but also help to control inflation.
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“We are also asking ministers to announce a 15 pence per litre fuel duty rebate for commercial vehicles to boost the economy. We await the Budget in mid-March to see if today’s speculation is confirmed.”
MP Jonathan Gulli, a member of the All-Party Parliamentary Group for Road Freight and Logistics (APPG), met with Hunt in November to discuss the issue. Responding to the report, he said he believes Hunt “understands that keeping the cut in fuel duty will get inflation down and help people in these tough times. It would be political suicide to do anything but keep the 5p cut.”
However Howard Cox, founder of lobby group FairFuelUK, said the Chancellor should go further. He said: “The Chancellor cannot now ignore that the Office of Budget Responsibility’s planned 23% duty hike will add 2.3% to inflation, reduce GDP by 1% and cost 37,000 jobs.
“Freezing one of the world's already highest motoring fuel taxes is welcomed but the Treasury has to go much further and reduce this regressive tax significantly to put more money into consumer spending and business investment.
“Inflation is slowly falling because of recent falling pump prices. So wake up please, smell the coffee and recognise Mr Hunt, you could make a massive impact into lessening the cost-of-living-crisis in the stimulation of real economic growth by cutting fuel duty big.”
A government spokesman said: “No decisions have been made on fuel duty rates, which is a matter for the Spring Budget and will align with the Office for Budget Responsibility’s Spring economic forecast.”