Rishi Sunak refuses to rule out 12p fuel duty increase

Fuel duty: Proposed 12p increase branded 'disgusting' by campaigner

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Rishi Sunak has been answering questions from the Commons Liaison Committee all afternoon, with West Worcestershire MP Harriett Baldwin grilling the Prime Minister on the topic of fuel duty. Fuel duty was cut by 5p per litre earlier this year when Mr Sunak was Chancellor of the Exchequer, saying it would save Britons around £2.4billion over the next 12 months.

However, last month, the Office for Budget Responsibility published its Economic and Fiscal Outlook report which included information about a potential fuel duty law change. 

It stated there would be a planned 23 percent increase in the fuel duty rate in late March 2023, which would add £5.7billion to Government coffers next year, but hammer drivers.

This would be a record cash increase, and the first time any Government has raised fuel duty rates in cash terms since January 1, 2011. 

During the Committee, Harriet Baldwin MP, chairwoman of the Treasury Select Committee, said: “Speaking of things not being perfect, baked into the Chancellor’s Autumn Statement is the assumption that fuel duty is going to rise by 12p in the spring.

“I’m sure you would want to confirm today that that’s not going to happen?”

Mr Sunak responded, saying: “Having previously had his job, I always preferred it when the Prime Minister made absolutely no comment about future tax policy, so I will very much adhere to that.”

Ms Baldwin, who has been a Conservative MP since 2010, questioned whether Mr Sunak would “let the Chancellor get away” with increasing fuel prices.

The Prime Minister again refused to rule out a fuel duty increase, adding: “I’m going to let the Chancellor make the policy on fiscal decisions and make them in the normal way.

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“Whether I was Chancellor or as Prime Minister, I’d say exactly the same thing. 

“The tax decisions are those that are made by the Chancellor in fiscal statements and that’s the way it should be.

If the move was to go through then the current rate of fuel duty – cut from 57.95p per litre to 52.95p per litre in March 2022 – would rise to about 65p.

When VAT is added to this, the change would mean the pump prices of both petrol and diesel increase by about 12p per litre.

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According to RAC Fuel Watch, all fuel types should fall sharply in the future, with average petrol prices being around 152.96p per litre, while diesel remains significantly at 175.75p.

The original fuel duty cut, made during the Spring Statement in March, was said to help car drivers save around £100 a year, while van drivers would save £200.

Mr Sunak added that it would be in place for a full 12 months until March 2023, saying that hauliers would benefit the most, saving £1,500.

Speaking after the release of the OBR documents in November, the Prime Minister criticised the Treasury department for assuming a 23 percent fuel duty hike.

He said: “They were wrong to assume we are going to do that. That is a decision for the Spring Budget.”

It is estimated that the Government receives around £26.2billion from fuel duty, with the OBR describing it as a “significant source of revenue for the Government”.

That would represent 2.7 percent of all receipts and is equivalent to around £930 per household and one percent of national income.

Fuel duty is levied per unit of fuel purchased and is included in the price paid for petrol, diesel and other fuels used in vehicles or for heating.

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