For the umpteenth time in 16 years of campaigning, the Westminster fuel-tax script appears to be writing itself again.
According to Treasury sources briefing the FairFuelUK campaign, Chancellor Rachel Reeves is preparing to drop the planned fuel duty rise from her Autumn Budget, though insiders caution that any reprieve is unlikely to survive beyond the March 2027 Financial Statement.
The retreat, if confirmed at the despatch box, will be the latest chapter in a saga that has become a fixture of every fiscal event since George Osborne first froze the duty in 2011. It will also be a notable, if temporary, win for Britain’s 5.5 million small businesses, many of whom now describe forecourt costs as the single biggest unhedgeable line in their operating budgets.
A £3bn pump tax raid since the Iran crisis began
Since hostilities flared in the Gulf, drivers have paid an estimated £3 billion more to fill up, while the Treasury has banked close to an additional £500 million in VAT receipts off the back of higher pump prices alone. Oil majors, predictably, have reported bumper margins. The motorist, equally predictably, has been left to foot the bill.
That contrast – soaring corporate profits set against a stagnating consumer economy – is what has put fuel duty firmly back on Reeves’s desk. As Business Matters reported last month, the Middle East flare-up has dragged headline inflation back to 3.3 per cent, hitting transport-heavy SMEs hardest of all.
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