Fuel duty in the UK stays frozen for 12th straight year as petrol prices rise

by Jack Harrison, Autocar UK 28 Oct 2021


The UK’s Chancellor of the Exchequer Rishi Sunak has unveiled his budget for 2022, detailing his plans for a speedy economic recovery from the Covid-19 pandemic, and among pledges for improved social services, schooling and air travel are a number of policies that will have a significant impact on UK motorists. 

The planned rise in Fuel Duty has been frozen for the 12th year in a row at 57.95 pence (Rs 60.02)  per litre. Yesterday, petrol scaled a new high of 143.48p (Rs 148.61) and diesel was at 146.89p (Rs 152.14), Pre-Covid, petrol was priced at 122p (Rs 122.36) and diesel at 125p (Rs 129.47).

 

Sunak said: “With fuel prices at the highest level in eight years, I’m not prepared to add to the squeeze on families and small businesses”. The Chancellor estimated that the freeze in fuel duty will save more than £8 billion (Rs 72,472 crore) over the next five years compared with the pre-2010s “escalator system”. He also estimated that the average tank of fuel will cost £15 (Rs 1,359) less per car and £30 (Rs 2,717) less per van than it would if duty were to rise. 

The average car driver will have saved £1,900 (Rs 172,121) over the 12 years of the frozen rate, he added. 

Simon Williams, fuel spokesman for the RAC, said: “We welcome the Chancellor’s confirmation that duty will continue to remain frozen at 57.95p a litre. With pump prices at record highs, now would have been the worst possible time to change tack and hike up costs still further at the forecourt.

If duty had gone up, RAC data suggests the average price of a litre of petrol could have reached 147p, taking the cost of a tank to over £80, and diesel an eye-watering 150p."

However, Williams believes that more could have been done to favour the motorist, saying:  “We’re disappointed he did not provide some respite for drivers at the pumps.

“As VAT is charged on the final cost at the pumps, a temporary cut in VAT to motor fuels would have benefitted drivers immediately at a time when filling up the car is hurting household budgets more than ever before, as well as the wider economy, as people will have less money to spend.”

Sunak also announced more funding for transport infrastructure. As part of this, the government will spend £21 billion (Rs 190,239 crore) on new roads around the country, some £2.6bn of which will go towards a long-term programme to upgrade 50 local roads around the country. 

An extra £5 billion is being allocated to local road maintenance, which Sunak claims will be enough to fill one million potholes a year. Usually, the budget allocates a fixed amount to cover potholes, rather than a repair quota.