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Drivers braced for first fuel duty rise in eight years

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Written by: Paloma Kubiak
03/07/2018
Already-squeezed motorists fear they could be hit with further price rises as the government today refused to rule out lifting the fuel duty freeze as it looks to boost funding for the NHS.

During Treasury questions, the Treasury Minister, Mel Stride MP was asked about reports that the government is considering removing the fuel duty freeze to help support the NHS.

But the MP failed to rule out the move, meaning this would see drivers contend with higher pump prices as well as already increased insurance premium tax.

In November’s 2017 Budget, the Chancellor announced the expected fuel duty rise would be cancelled for the eighth year in a row, saving drivers an average of £160 a year. It remained at 57.95p per litre for both petrol and diesel.

But this has now been thrown into doubt. RAC head of roads policy, Nicholas Lyes, said UK motorists already pay some of the highest fuel duties in Europe – with VAT also charged on every litre of fuel sold.

“This, coupled with fuel prices being at their highest in more than three years means that drivers are increasingly being squeezed at the pumps. During this very period, motorists have also seen tax on their car insurance premiums double. Overall, it means the Treasury is now collecting more than £40bn a year from drivers in motoring-related taxation, so there is a very strong argument that motorists are already paying their fair share of tax.”

Lyes added that for many people, the car is essential, especially where public transport is patchy or it simply isn’t practical to walk or use another form of transport.

“By the Treasury’s own admission, lower fuel duty rates actually boost economic growth and consumer spending which offset any revenue loss. Given the evidence, we do not think there is any justification for the Chancellor to raise fuel duty.”

Luke Bosdet, AA fuel price spokesperson, said motorists have already put up with a 25p a litre increase in the cost of petrol since the winter of 2015/16 and as such, “families don’t have the slack in their personal or family budgets to be able to absorb an increase in fuel costs”.

But, he also added:“Ironically, drivers used to turn to diesel to cut their fuel costs. At only 3p a litre more expensive than petrol and 15% more efficient, it is now beginning to make sense for more commuters to make the switch – regardless of how much politicians demonise the fuel.”

An HM Treasury spokesperson said: “As the Prime Minister and Chancellor have made clear, taxpayers will have to contribute a bit more, in a fair and balanced way, to support the NHS we all use. We will listen to views about how we do this and will set out plans at future fiscal events.”

Related: See YourMoney.com’s Diesel cars: do they still have mileage for drivers? for more information.

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