Fuel duty is set to be one of the biggest talking points of the Spring Budget with Jeremy Hunt wielding power over how much petrol and diesel owners pay at the pumps.
It seems that ahead of every Budget we hear how fuel duty is under threat of subtle price rises which never materialise.
The duties have not been increased at all since 2011 with rates actually cut two years ago by 5p per litre to help drivers deal with the cost of living crisis.
However, retaining freezes comes at a cost with the Treasury estimated to have lost £100billion in extra revenue over the past decade.
Meanwhile, fuel duty appears to be a dying industry as more and more motorists make the switch to electric vehicles.
Revenues are expected to drop from £16.4million in 2019 to £11.4billion in 2028, according to data from the RAC Foundation.
With the move to net-zero and the push for electric models, it may make sense to hike fuel duty fees, punish combustion engine drivers and cash in on revenue while they still can.
This could increase demand for EVs and plug the black hole in finances expected as more make the leap to secure new battery models.
But it’s not as simple as that and whichever way you look at it, Jeremy Hunt has only one option next week. He must keep the discounted 52.95p rate frozen and scrap the planned ending of the 5p discount on March 23, 2024.
The 5p cut was introduced when unleaded petrol fees stood at 166p per litre, almost 24p higher than the current 142p per litre average. Costs have dropped and this could justify the Chancellor’s call to return fees back to their previous 57.95p charge.
However, after two years, drivers will likely view this as a 5p rise which will add digits to their petrol bill and not a simple return to the status quo.
Motorists have come to expect this discount now and have adjusted their monthly budgets accordingly and changing this will not be popular.
Costs may have come down for now but specialists at the RAC Fuel Watch say petrol and diesel costs are “likely to rise”.
At the same time, fuel prices are still higher than fees recorded throughout the majority of 2021. If anything, simply retaining fees at the current rate may not be enough and Jeremy Hunt could be forced to cut duties again as an easy vote winner.
Maintaining what drivers currently have isn’t likely to peak people’s interests as much as further discounts and the Conservatives need something urgently to close the poll gap to Labour ahead of a General Election.
In recent months, the Tories have started to position themselves as the party of motorists with a special ‘Plan for Drivers’ report and a goal to tackle anti-car policies.
Compare this with Labour’s pledge to reinstate the 2030 petrol and diesel car ban and Rishi Sunak could make protecting combustion models in the short term a major part of his pitch to the nation.
FairFuelUK’s call for a further 20p cut may be slightly on the ambitious side but slicing a bit off the petrol bill could help win back Red Wall voters ditching the party for pastures new.
