Rachel Reeves is set to confirm a rule change that will save drivers over £100 a year. The Labour Party Chancellor is planning to cancel a rise in fuel duty this week when she unveils a package of measures to reduce the cost of living.
Fuel duty freeze details
The chancellor will announce she will not put up the tax by 1p as was due to happen in September, government sources said. She could also cancel all of a 5p rise that is due to happen in stages over the subsequent six months.
Ms Reeves is expected to announce the plan to the Commons on Thursday. The prime minister’s spokesperson declined to comment on the plans.
Impact on households
The Social Market Foundation says should the chancellor cancel the increase again and make permanent what was meant to be a temporary 5p cut in fuel duty, she will save the bottom quintile of households £56 per year, or £4.66 per month. Average households will save just £119 per year, or about £10 per month, the SMF added.
The richest households, which tend to drive more and own more cars, will save the most from a freeze, saving £153 per year from the freeze.
Government stance
Richard Walker, the executive chair of the supermarket chain Iceland and the government’s cost of living champion, said on BBC Radio 4’s Today programme: “The 5p fuel duty cut that you allude to is an interesting one. That’s going to expire in September. I think, given where we are, we do need to be thinking and talking about extending it or enlarging it.”
