Keir Starmer’s advocate for addressing the rising cost of living has suggested that the government should contemplate extending or potentially raising the 5p fuel duty reduction as tensions escalate in the Middle East.
The call from Iceland’s leader, Lord Richard Walker, adds to the growing demand for government action in light of escalating fuel prices driven by the conflict in the Middle East.
Last year, Chancellor Rachel Reeves prolonged the 5p per liter fuel duty cut, initially implemented after Russia’s invasion of Ukraine in 2022, until August 2026. However, this reduction is set to expire in September and will be gradually phased out by March 2027.
During an appearance on BBC Radio 4’s Today program, Lord Walker emphasized the need to discuss the possibility of extending or expanding the current 5p fuel duty reduction, especially in the context of current events. He highlighted Australia’s recent decision to cut fuel tax by 14p per liter, making the UK’s 5p cut seem relatively modest.
Additionally, Lord Walker responded to Tory peer Lord Simon Wolfson’s suggestion that the Treasury should not profit from the conflict in Iran. Lord Wolfson, CEO of Next, proposed adjusting fuel duty to alleviate immediate cost pressures for businesses and consumers, a sentiment Lord Walker acknowledged.
The Prime Minister and Chancellor are closely monitoring the situation amidst the ongoing tensions in the Middle East, including the impact of the US-Israeli conflict with Tehran and the disruption in the oil shipping routes like the Strait of Hormuz.
Rachel Reeves reassured that the government is actively preparing for various scenarios to ensure a stable energy supply and mitigate rising costs for consumers. She dismissed the idea of a tax windfall for the Treasury due to increased pump prices, noting the government’s focus on supporting the public.
While acknowledging the challenges posed by the conflict, the Chancellor emphasized the economic consequences, highlighting the increased government borrowing costs and potential revenue fluctuations.
A Treasury spokesperson reiterated the government’s commitment to a robust economic plan to support the public amidst global uncertainties. The freeze on fuel duty until September and targeted assistance for those affected by higher heating oil costs are part of the government’s efforts to protect consumers from price hikes and reduce food expenses.
