Increasing the current 5p fuel duty freeze would have a “devastating impact on society’s most vulnerable”, according to a motoring service.
Ahead of the Labour Government’s first Autumn Budget since being elected, The AA has warned the Chancellor to leave fuel duty frozen while “global prices remain volatile”.
Households on low incomes would most likely be hit by a fuel duty rise, with over half (55%) of 11,000 respondents surveyed worried about the price of fuel, The AA’s survey finds.
Just under half (45%) were concerned about the possibility of fuel duty rising for the first time since the 2011/12 financial year.
The current 52.95p fuel duty rate included in the price you pay for diesel and petrol was extended by 12 months in the Spring Budget of 2023 and extended further in the final Budget by the previous Conservative Government in March.
The knock-on effect of a fuel duty rise would be a hammer blow to volunteers and carers who travel to visit people who require their care, according to The AA.
This is because, as it stands, many fuel allowances are already falling below the current costs of petrol, which in the UK remain the highest across Europe.
A fuel duty hike would also place more burden on the NHS’ finances to afford petrol and diesel for its ambulances to transport patients and those in need of support, The AA’s research found.
In the last financial year, the UK consumed 46.4 billion litres of petrol and diesel, the HMRC’s Hydrocarbon Oils Bulletin data shows. So, the data suggests a 5p increase in fuel duty would see over £2.3bn heading to the Treasury’s coffers instead of being spent by UK households.
‘Unnecessary hike could make things worse’
Last month, Keir Starmer braced the UK for a “painful” Autumn Budget, which Edmund King, the president of The AA, hopes doesn’t involve a fuel duty increase.
King said: “Scrapping the 5p freeze in fuel duty would hurt everyone, not just drivers. Everything from the price of food in supermarkets to the delivery of social care within our communities is impacted by pump prices, and an unnecessary hike in fuel duty could make things worse.
“Household budgets are already stretched and everyone benefits from a temporary suppression in fuel duty. Even households without a car feel the benefit of discounted fuel duty through cheaper bus fares and more affordable goods from supermarkets”, he added.
A long-standing issue on the UK forecourts has been the disparity between the wholesale cost of fuel compared to what retailers are charging drivers.
Earlier this year, the Competition and Markets Authority (CMA) said it was concerned about the high margins supermarkets and retailers placed on their balance sheets.
In 2017, Morrisons, Sainsbury’s and Asda recorded margins of 4%, but that accelerated to 7.8% in 2024, its report found.
On the pricing of fuel by retailers, King said: “Much has been made of the margin of fuel retailers, and while there are examples of some outlets collecting higher-than-necessary profits, most small and independent forecourts are struggling to keep their heads above water compared to 2017.
“The best way to ensure fair pump prices is to complete the initial good work of the CMA to legislate that all fuel retailers must publish their prices.”
The AA’s president added: “We don’t deny there are tough choices for the Chancellor to make in October, but hiking fuel duty could backfire on working people and fuel inflation.”
