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Rishi Sunak Hints At Fuel Duty Cut In Spring Statement To Tackle Cost Of Living Rise

Rishi Sunak Hints At Fuel Duty Cut In Spring Statement To Tackle Cost Of Living Rise

(Alamy)

5 min read

The Chancellor has not ruled out cutting fuel duty in his Spring Statement, claiming that he “understands” the challenges facing motorists amid rising fuel prices.

Speaking to Sky News’ Sophy Ridge, Rishi Sunak said he “can’t comment on specific things” that may be announced in Wednesday’s mini-budget when asked about fuel duty.

He continued: “What I would say is, I understand that. I have a rural constituency. People are incredibly reliant on their cars and this is one of the biggest bills that people face. 

“[We’re] watching it go up. We're all seeing that. And when we're filling up our cards, I get that.”

Labour’s Rachel Reeves said the opposition “won't stand in his way” if Sunak announced a cut to fuel duty, but said the policy does not “[rise] to the scale of the challenge that we face”.

In other developments:

  • Rishi Sunak has defended comments made by Boris Johnson in which he appeared to make a comparison between Brexit and Ukraine’s response to the Russian invasion. The Chancellor told Sky News that the “two situations are not analogous and no one is saying that they are”.
  • The Sunday Times reports that Sunak is considering adjusting the thresholds at which National Insurance contributions are paid to mitigate the 1.25 percentage point hike coming this April.
  • Sunak and Johnson are said to be at odds over plans to expand the UK’s nuclear capacity, according to The Sunday Telegraph. This week, PoliticsHome reported that support is growing for a new nuclear plant in north Wales.
  • Ministers are also reportedly considering plans for a state-owned nuclear company that would take stakes in future power stations, according to The Sunday Times.

Petrol prices have soared in recent weeks after both the UK and the US announced they were phasing out imports of Russian oil in response to the country’s invasion of Ukraine. 

The AA motoring group reported that the cost of oil hit a 14-year high last week, but suggested pricings are easing amid hopes that a new nuclear deal with Iran could remove sanctions on the country banning oil exports.

On BBC One Sunak refused to comment further, but he said the economic situation was "volatile", adding: "The steps we've taken are not cost-free... I wish I could fully protect people against all the challenges that lie ahead." 

He went on: "Where we can make a difference of course we will." 

Sunak has faced increasing pressure from within his own party to mitigate rising costs with a 1p cut to fuel duty, which has been frozen at 58p a litre since 2011.

But Labour claims the cut would not go far enough, with Reeves suggesting that “even a 5p reduction… will only reduce filling up the car with petrol by £2”.

“I don't think that really rises to the scale of the challenge that we face at the moment, which is why we're calling for a windfall tax on the big profits being made by North Sea oil and gas companies.”

She also called for further measures to tackle rising energy costs, including removing VAT on gas and electricity bills and expanding the warm homes discount scheme. 

“We know it is families and pensioners on low and modest incomes who are struggling most at the moment with the rising prices. So that would be my priority,” she told Sky’s Sophy Ridge.

“But any sensible measures to deal with the cost of living crisis, of course Labour would support those on Wednesday.”

Several Tory MPs raised the matter of fuel costs in the Commons this week, with senior backbencher Robert Halfon claiming many people were “heading for a de facto lockdown” as they could not “afford to commute by car and have to stay at home”.

Another Tory MP, Aaron Bell, also called for the government to "find ways to reduce [fuel] duty burden so people in my constituency can fill up and go to work".

PoliticsHome reported this week that the Chancellor has been holding meetings with multiple Conservative MPs to hear their suggestions for how to further protect households from soaring energy prices.

"He's done a lot of work this week talking to as many colleagues as possible," said one Tory backbencher among those who met with Sunak.

"He chose to do that, it was him inviting us into his office. This wasn't just colleagues grabbing him."

The fact that Sunak has been so keen to gauge the views of Conservative MPs points to a growing concern within the Treasury about the impact of rising energy prices on voters.

Last month Sunak admitted people would find it "incredibly tough" to pay their bills in the coming months, prompting the early announcement of a support package to help avert the crisis.

Households will be given a £200 loan that will help discount their energy bills, to be repaid over five years, plus a £150 rebate on their council tax.

Labour has accused the Chancellor of “cynicism” over his apparent resistance to cutting taxes in next week’s spring statement to ease the cost of living crisis.

Shadow Chief Secretary to the Treasury Pat McFadden told The Rundown podcast from PoliticsHome the Chancellor is operating not in the best interests of the public, but in order to “chime with a Tory election grid”.

McFadden said the inflationary pressures and rising fuel prices are being experienced by lots of countries, especially given the impact the Russian invasion of Ukraine is having on global markets.

But he argued that UK consumers are going to feel it much worse as the government is determined to go ahead with a National Insurance increase next week, while also freezing income tax brackets.

“The Treasury is telling anyone who will listen that they are bringing these tax increases in now, because they want to cut taxes before the election,” he said.

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