06 March 2024 , 12:43
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Chancellor Jeremy Hunt has frozen fuel duty for another year in a bid to keep drivers sweet for the upcoming election.
The Chancellor said the move would save drivers around £50 a year adding that it would also "bring total savings since the 5p cut was introduced to around £250."
The "temporary" 5p cut to fuel duty - first introduced by Rish Sunak in 2022 - will also remain in place until March 2025. Government policy is that fuel duty should rise in line with inflation, but this has not happened since 2011.
The 5p cut was extended again in March 2023 under Jeremy Hunt and was set to expire this year. Fuel duty is included in the price you pay for every litre of fuel you buy and last year's freeze saved drivers 12p on every litre they bought.
Fuel Duty was first cut by 5p in the 2022 spring budget and it has been extended ever since (Getty Images)RAC head of policy Simon Williams said: “With a general election looming, it would have been a huge surprise for the Chancellor to tamper with the political hot potato that is fuel duty in today’s Budget. It appears the decision of if or when duty will be put back up again has been quietly passed to the next government.
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“But, while it’s good news that fuel duty has been kept low, it’s unlikely drivers will be breathing a collective sigh of relief as we don’t believe they’ve fully benefited from the cut that was introduced just two years ago due to retailers upping margins to cover their ‘increased costs’. This has meant fuel prices have been higher than they would otherwise have been. What’s more, despite today’s positive news it’s still the case that drivers are once again enduring rising prices at the pumps, sparked by the oil price going up – the average cost of a litre is already up by more than 4p since the start of the year.”
Since the Russian invasion of Ukraine, drivers have faced skyrocketing petrol and diesel costs. Just last month, the price of unleaded petrol rose from 140.75p a litre to 144.76p. This added around £2 to the cost of filling up, according to the RAC. Diesel went from 148.53p to 153.22p a litre which meant the cost of filling a 55-litre tank rose by £2.60.
Lisa Watson, Director of Sales at Close Brothers Motor Finance, said the move however would only have a "small positive impact". Adding: "It’s a step in the right direction, particularly for the 53% of drivers who cite fuel prices as the biggest challenge in the next 12 months."
"We’ve seen continuous hikes at the pumps over the last few months and this has added further pressure to drivers who already feel they’re faced with increased costs from all lanes, making car ownership difficult to afford for 62% of drivers. What is essential now is that this cut reaches drivers' fuel tanks and wallets.”
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