Starmer postpones 5p fuel duty increase for rest of the year

Prime Minister Keir Starmer has confirmed the government will not proceed with a planned 5p rise in fuel duty this year. Chancellor Rachel Reeves had announced in last year’s Budget that fuel duty would increase by 1p in September 2024, followed by 2p in December 2024, and another 2p in March 2027. However, the government has now decided to freeze fuel duty until December 31, 2026, delaying the increases indefinitely. The 5p cut in fuel duty was introduced by the previous Conservative government in March 2022 and was originally intended to last for one year. Fuel duty raised £24.3bn for the Treasury last year, while the 5p reduction was estimated to cost around £2.4bn annually. Extending the freeze until the end of 2026 is expected to cost approximately £240m, though rising fuel prices have offset some losses due to the 20% VAT applied to fuel. The decision comes amid ongoing concerns about fuel costs and economic pressures. While the Treasury will lose revenue from the delayed duty increase, the freeze may provide temporary relief for drivers. The government has not provided further details on whether the policy will be revisited after 2026.