The Labour government, led by Prime Minister Sir Keir Starmer, has announced the cancellation of the planned increase in fuel duty, extending the temporary 5p per litre cut to support drivers amid rising living costs. Speaking in the House of Commons, Starmer emphasized that extending the freeze on fuel duty is a vital step to help working families cope with inflationary pressures.
Chancellor Rachel Reeves had previously committed to freezing fuel duty for nine months but intended to end the temporary 5p cut introduced in 2022 by former Conservative leader Rishi Sunak. That initial cut was a response to the economic fallout from Russia’s invasion of Ukraine.
Starmer highlighted additional measures, including a 12-month vehicle tax holiday for hauliers, designed to curb transport costs and stabilize prices. “This is possible because of the Chancellor’s sound fiscal management, positioning the UK as the fastest-growing economy in the G7,” he remarked.
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A Treasury statement revealed that the fuel duty freeze will save the average driver approximately £120 by the end of 2026, while the one-year exemption from vehicle excise duty will reduce costs by £600 for typical heavy goods vehicles.
Rachel Reeves noted the impact of international tensions: “The conflict in the Middle East is driving up fuel prices at home. Our decision to protect fuel costs is crucial for families and businesses alike, fostering a more resilient UK economy.”
Additionally, the government confirmed that current fuel duty rates are at their lowest point in over two decades. This reduction is particularly significant for sectors affected by surging red diesel prices, which, according to National Farmers' Union (NFU) economists, have increased by as much as 55% since the Middle East conflict began.
NFU President Tom Bradshaw welcomed the government’s stance, calling the scrapped fuel duty hike and red diesel duty cut “positive steps” to alleviate inflationary pressures in agriculture. He urged further actions, including reversing recent electricity tariff rises and postponing the implementation of the Carbon Border Adjustment Mechanism (CBAM), to ease costs for farmers and stabilize the food supply chain.