The government is said to be seriously considering raising fuel duty after it being frozen for eight years and saving drivers over 13% on everyday costs. Along with this, it is thought that they will also increase the duty on alcohol to raise help raise upwards of £20 billion for the NHS and other health services.
If the move was to be actioned in the Autumn budget, then it would mean the government could raise over £800 million based on current estimates within the first 12 months.
However, its predicted that the government may have lost out on over £46 billion from freezing fuel duty since 2010, and this slight increase does not look like it will go far in chopping away the deficit.
Fuel duty has been a contentious subject for all parties since the then Conservatives introduced the fuel escalator in 1993, this increased fuel duty in line with inflation, which saw the tax surge by 75% just five years after it was introduced. Once scrapped in 1999, many said it was too late and the damage had already been done.
This brought forward the need for reform. In 2010 it was frozen at 57.95 pence per litre, at the time in an effort to reduce the stress on households across the country, but with the deficit not getting any smaller, the government are now acting towards changes which could give them a much-needed boost within the budget.
Causing a stir
Ministers and public bodies on both sides of the argument have been raising the heat since this report was released. While some backbench MPs are strongly against the rise, some MPs suggest that a small increase in fuel and alcohol duty would be less disagreeable to the general public than increasing income tax, which has not changed since the 70’s.
Insiders from the government didn’t confirm a specific increase, but the general gist of the message was a positive affirmation of the change. A Whitehall source told The Times: “The PM has been clear, our commitment on the NHS goes above and beyond anything that’s come before and we will all need to contribute a bit more in a fair and balanced way.”
Britain’s fuel is already one of the most expensive in the world, and this rise would help to cement our place at the top. We’ve mentioned before that some families are having to choose between food or fuel and this rise will not help, no matter the increase.
On the other hand, environmental campaigners would encourage a rise as it means people are less likely to use their cars and therefore reduce emissions. A report by Greener Journeys last month recommended increasing fuel duty by as 8 pence per litre, but this, however, is most unlikely to happen.
Carl Emmerson, deputy director of the IFS, said: “If they don’t [lift the freeze], the deficit hole will get even bigger. The challenge of finding the money for the NHS, keeping the public finances on the track the chancellor might want, would all be harder if you continued freezing it. I presume that the Treasury is finding it difficult to say we can just squeeze spending . . . That leaves them the option of either ditching the deficit target and borrowing more, or going for some tax rises.”
Any increase will not be unexpected, as fuel duty has been frozen for a long period of time. The government has already pledged to put fuel duty in line with the retail price index for 2019/20, but this change would bring it in a year earlier and potentially increase it earlier than initially anticipated.
What can you do?
Until the government confirms its changes and releases the cost increase, you can do a few things to share your opinion on the changes to fuel duty.
- Write to your MP – share your views and what you think about the subject, would you support or oppose a change and what change would you like to see? Ask what their opinion is and see what they say in return to your letter.
- If you are strongly against such a change, then have a look at FairFuelUK. They describe themselves as “The real independent and not for profit voice of 37m UK drivers” and work to lobby government on better ways to tax road usage for fairer driving laws. You can sign up to support their petitions, and they will automatically add your name to anything they take to parliament etc.
- Use the PetrolPrices app to find the cheapest fuel near you as you can save over £200 a year on fuel by using our service.
What would an increase in fuel tax mean for you? Do you think an increase to help the NHS is fair? Let us know below