15 March 2023 , 12:41
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Millions of drivers will save money at the pumps after Jeremy Hunt announced he will keep a freeze on fuel duty for the next 12 months.
The 5p-a-litre cut in fuel duty, announced during the Budget last year, will also remain in place for the next year.
Speaking in the House of Commons this afternoon, the Chancellor said the measures will save the average driver £100 a year.
Fuel duty is a tax on petrol, diesel, biodiesel and bioethanol and is included in the price you pay for every litre of fuel you buy.
Currently, fuel duty on both petrol and diesel is 52.95p-a-litre and this rate has been frozen since 2011.
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Government figures show the average cost of a litre of petrol and diesel at UK forecourts is around £1.47 and £1.67 respectively.
The Government says the support will cost £10billion.
Going forward, the Government will keep fuel duty rates "under review" saying that it will "carefully consider support for motorists, fiscal implications, and use of fuels."
RAC head of roads policy Nicholas Lyes commented: “We welcome the Government’s decision to keep the 5p fuel duty cut in place for another 12 months.
"The cut has given drivers some much-needed relief in what has been the most torrid year ever at the pumps, with price records being broken even after duty was cut.
"Given the importance of driving for consumers and businesses, duty should be kept low to help fight inflation.”
Domenico Mariconda, CEO of fuel card provider Right Fuel Card, said he had hoped for a reduced rate or a further price reduction in fuel duty in an attempt to slightly balance out the "volatile and stubbornly high" fuel prices from 2022.
He said: “Whilst pump prices are beginning to decline, they’re still much higher than they ever have been," he explained.
"With customers facing increases in costs across the board, from groceries to energy bills, it’s no surprise that the Government has continued the fuel duty freeze and extended the 5p per litre price cut even further in a bid to combat these costs, and we welcome the initiative that will help keep drivers on the road.
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“Whilst overall fuel prices are out of the Government’s hands, we’d hope that consumers will see a fall in prices throughout 2023 in line with the drop in oil prices that we’ve seen in 2022, especially with sustained pressure from a variety of sources.
He also noted that retailers had to play their part and pass on the lower rate to customers.
The Chancellor has been under a lot of pressure to keep last year's tax cut in place to help drivers with the cost of living.