Spring statement: Rishi Sunak slashes fuel duty in light of energy crisis

As part of the Spring Budget, Chancellor Rishi Sunak announced a cut in fuel duty.

He announced a 5p cut to fuel duty to come into force at 6pm tonight.

Motoring group, the RAC, says cutting fuel duty by 5p will take £3.30 off the cost of filling a typical 55-litre family car.

Prices to fill up the car with fuel were rising before the war in Ukraine – and the fallout from Russia’s invasion has made things worse.

Jonathan Main, partner at MHA, says the benefit to households will be extremely modest given the trying circumstances, amounting to a mere £52 over 12 months:

“The 5p cut in fuel duty may save the average motorist a mere £52 over the next 12 months*. It will lower duty at the pump to 52.95p per litre and reduce the price of diesel by 6p per litre, including VAT. This is a pretty modest saving and of course only of any use if you own a car. If circumstances were less challenging we could hail this as a progressive step, however, considering the current times, it is not.

“Indirect taxes such as VAT, fuel duty, alcohol and tobacco duties disproportionately impact the poorest consumers, as a far larger proportion of their income is used on items subject to those taxes. However, at present, with inflation forecast to increase to 10%, fuel prices already up by 50%, and domestic energy about to rise by the same amount, the challenge for poorer households is too acute for trimming 5p off fuel duty to make much difference. Increasing benefits or the national minimum wage, reducing income tax or delaying personal tax rises are much more likely to have a meaningful impact. These should have been the focus for the Chancellor today.”