Fuel duty has been unexpectedly frozen in today’s UK budget, for the sixth consecutive year.
It’s pleasing and refreshing to be proven wrong on this issue. As recently as this Monday we reported that a two pence per litre increase in fuel duty seemed highly likely as part of this budget – a view shared across the national press. However, Chancellor George Osborne announced today that the longstanding freeze will remain.
Cynics will no doubt seize on the undeniable fact that our fuel duty is still the highest in Europe. However, against the backdrop of this surprisingly positive news, it’s perhaps best to focus on the fact that, for once, a widely-anticipated tax increase has not come to pass.
The savings involved aren’t insignificant either; two pence per litre more adds £1.20 to every fill-up of an average 60-litre tank, so over the course of a year this makes quite a difference.
Supermarkets and the Fuel Duty Freeze
Today’s announcement may leave some of the supermarket chains rather red-faced. As reported in The Express today, Tesco already started to lift prices beyond 99 pence per litre levels “amid fears” of the widely-expected duty increase. One now wonders if they may fall back again in view of the continued tax freeze.
However, fuel duty isn’t the only factor contributing to pump prices. The cost of crude oil is now beginning to rise, albeit still at a decidedly tentative rate. This will contribute to wholesale fuel price increases, and unfortunately for the consumer, this means there remains a reason for costs at the pumps to creep up.
Insurance Premium Tax
Unfortunately, there was some negative news for motorists in the budget. The standard rate of insurance premium tax is increasing by 0.5%, according to a report in The Telegraph. This is likely to cause some upward pressure on car insurance costs, which according to the report have already risen by an average of 13% over the past year.
However, even this news isn’t as bad as it might have been, with some pundits had expected to see a far more significant 3% increase.
The budget obviously isn’t just about motoring. As is the case every time, different demographics will be affected by the various cuts, increases and changes in different ways. That said, we really didn’t expect to be reporting on a fuel duty freeze today – so that’s the good news we will remain focused on.
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