Chancellor Rachel Reeves to Cancel Fuel Duty Increase

Introduction

Transport operators, drivers, and compliance professionals closely monitor changes in fuel duty, as these directly affect operating costs and overall industry viability. Recent government developments regarding fuel duty increases are therefore of significant interest to the sector.

Chancellor Expected to Cancel Planned Fuel Duty Increase

Chancellor Rachel Reeves is anticipated to announce a reversal of the planned 1p rise in fuel duty scheduled for September. Furthermore, she may cancel the entire 5p increase that was due to be implemented in stages over the following six months. This decision is expected to be revealed in the House of Commons as part of a broader package aimed at mitigating inflationary pressures linked to the ongoing conflict in Iran.

Industry Response to Rising Fuel Costs

The reversal follows extensive lobbying from industry bodies such as the Road Haulage Association (RHA) and Logistics UK. Since the onset of the Iran conflict, fuel prices have surged, placing considerable financial strain on haulage firms. The RHA reported that, compared to mid-February, filling an 80-litre van tank now costs approximately £150, up from £110, while filling a 600-litre HGV tank has increased from around £850 to £1,150. This represents an additional £40 per van and £300 per HGV per fill.

The RHA has called for a complete government support package, including:

• No fuel duty increase in September
• An Essential User rebate
• Decoupling fuel duty from inflation from April 2027
• Fair payment terms to improve sector cashflow

Ben Fletcher, Chief Executive of Logistics UK, emphasised the urgent need for government intervention, noting that rising fuel costs threaten narrow industry margins and could lead to higher inflation across the economy. He also highlighted concerns that increased fuel prices may hinder the sector’s ability to invest in decarbonisation efforts aligned with the government’s Net Zero targets.

Calls for Immediate Government Action

FairFuelUK, supported by opposition MPs, is delivering a petition with 150,000 signatures to the Treasury. The petition urges the Chancellor to freeze fuel duty for the remainder of the current Parliament and to implement an immediate cut in fuel duty amid the ongoing cost-of-living crisis. The group points out that 40 other countries have already reduced fuel taxes since the Iran conflict began.

Howard Cox, founder of FairFuelUK, stated that cutting and freezing fuel duty would stimulate economic growth and provide immediate relief to drivers and businesses.

Mi Compliance Insight

Transport operators and compliance professionals should monitor the Chancellor’s forthcoming announcement closely, as any changes to fuel duty will impact operational costs and budgeting. It is advisable to review fuel cost forecasts and consider the potential effects on pricing, cashflow, and compliance with environmental targets. Staying informed will enable businesses to adapt promptly to government policy changes.

For further guidance or support on managing compliance and operational challenges related to fuel costs, please contact Mi Compliance.

Source: https://motortransport.co.uk/industry-news/chancellor-set-to-cancel-fuel-duty-rise/90364.article