The subject of fuel duty is perhaps one of the most contentious in British society. We already pay one of the highest proportions of tax to fuel in the world, indeed a 2014 study by the RAC Foundation showed that UK motorists were paying some of the highest proportional tax in the EU, second only to Sweden.
Chancellor Philip Hammond hinted at scrapping the freeze on fuel duties in a speech to MP’s in Treasury questions yesterday, saying that the impact of the policy, “must be looked at again.” Maintaining the freeze is predicted to cost the Treasury £38bn over the next three years, twice as much as we spend on NHS doctors and nurses.
Impact on the government and households
Since the fuel duty freeze in 2011, it is estimated the freezes have saved the average car driver £850 and the average van driver £2,100. However, in that process, it has cost the Exchequer over £46bn in revenue for the financial year ending 2019 and will continue to cost them if they do not increase the fuel duty.
Fuel duty, which currently stands at 57.95ppl, has remained the same since 2011 as successive ministers have not lifted the freeze for one reason or the other. This has been, in part, attributed to the promise of “blue-collar Conservatism” as outlined by David Cameron after the 2015 election. Any proposal to increase fuel duty would likely prompt a rebellion from a large group of Tory backbenchers who feel it would harm their prospects amongst some working-class voters.
Robert Halfon, a former Conservative minister, asked Mr Hammond to agree that the fuel duty freeze was beneficial to the economy, which Mr Hammond deflected by outlining the cost for the government and highlighting the savings for the motorist.
Mr Halfon, speaking to the Independent on the issue, said “The parliamentary arithmetic would make it incredibly difficult to introduce such a huge tax rise hitting millions of working people, it would also be a tax rise for businesses when they need financial stability in terms of leaving the EU, while lower fuel duty gives an impetus to economic growth which offsets the loss of tax revenue.”
There are, of course, questions as to whether the economic benefits of the freeze on fuel duties do, in fact, compensate for the significant loss of government revenue.
Impact on the motorist
Based on a rise of 2ppl a litre, we did some arithmetic to try and establish how much extra it would cost the motorist each year and what the economic effects would be.
With a 2ppl rise, motorists could expect to pay £30 more at the pumps. Based on the average UK price from this year so far, which is 128.7ppl, a rise of 2ppl in fuel duty would take it to 130.7ppl. Based on our predictions of a 2ppl rise, this could generate £927 million income for the government to go towards NHS funding, and removing the deficit, as promised by the Conservatives in their manifesto.
This, however, is not the only thing to take into consideration. By increasing the fuel duty, all companies would either have to take a hit in profits or increase the list price of items. It would cost an extra £800 a year to fuel a lorry at the price of 130.7ppl as well and so for companies that rely on road haulage, this could mean a huge increase in already astronomical costs for fuel for companies.
Rather complicated maths led us to approximate an extra £100 annual costs to the motorist if the government chose to up the cost of fuel duty, due to haulage costs and also for personal expenses. With the average UK salary hitting £27,271, according to the National Office for Statistics, and the average weekly budget for transport being £79.70, any increase here would be monumental, especially for low-income families, who are already struggling. Even the smallest of increases could push ‘just about managing’ families over the edge.
Other options
Aside from pushing for a rise in fuel duty, the government has a few other ways that it could potentially fund the £20bn for the NHS, including raising income tax for the first time since 1970 and others taxes on goods such as alcohol and tobacco. Conservative ministers hope that raising fuel duty would be the least contentious of their rather limited options and enable them to give much-needed funding to the NHS and other essential public services.
As Theresa May said earlier in the year, the money has to come from somewhere and so “fair and balanced” tax raises are a viable solution. Mr Hammond needs to find a way to fund the NHS without reneging on manifesto promises, and at the minute, one of the most feasible, but unliked, ways seems to be increased taxes on the motorist.
Moving forward
However, if a rise in fuel duty is on the cards, one way in which the government could offset the impact on business would be the introduction of subsidies to firms who invest in alternative fuels and electric vehicles. The government announced on Tuesday at the first ever zero-emissions summit in Birmingham, plans to increase funding for Zero Emissions vehicles, and also plenty of funding for Research and Development in the area.
Do you think a fuel duty rise could be justified? How much would you expect a fuel duty rise to be? Let us know below
What will happen to the millions upon millions that will be saved from our Brexit? More expences to MP’s? or more money available to the people of this country! I wont hold my breath.
The MPs will get an independent assessment of their salary and immediately implement any recommendation of an increase… which is a pity they didnt do the same for the police force after their independent review
What would I trust more… a politician or a rattlesnake with toothache? Bring on the snake.
What savings? We are having to spend billions renegotiating deals we already have and setting up agencies to mirror those we are already members of in the EU? Then there are all the additional civil servants we will need at HMRC etc.?
There will be no net saving, the loss of the customs union and complete free trading arrangement with the EU will cost us more. We lose the EU trade agreements with the rest of the world. The EU has more clout in trade agreements than we do alone.
The EU is actually very poor at making trade agreements with the rest of the world. A move to WTO rules (as already apply to all global trade outside the EU) in the event of a ‘no-deal’ Brexit would lead to a net gain in UK tax revenues because of the UK’s trade deficit with EU nations. What’s more, as UK trade outside the EU is already conducted on WTO terms, I don’t understand the fuss about merely extending those terms to include UK trade with EU nations – businesses in general should be able to handle such a change. There absolutely will be a net gain for the UK in leaving the EU, for the simple reason that at present the UK pays to prop up some other EU nations. The likes of Germany and France hate the idea of Brexit simply because they will have to pick up the slack caused by the UK no longer paying that money, hence they make nasty threatening noises. The sad thing is that T May and her Remainer pals pay any heed to these nasty noises and give in to any demands from the EU – it’s just not necessary to do so. The EU has more to lose from a no-deal Brexit than does the UK, but their politicians and bureaucrats are so entrenched in their hatred that they can’t see it. If they could put on their thinking hats for a moment, they might realise that a better outcome would be a decent trading relationship, but there’s little hope of such pragmatism. So… roll on a ‘no-deal’ Brexit, I say. By the by, when the UK joined the EEC, we were told that it was just about trade – so if the truth (that it was a project for ever-greater progression to a single European state) had been known back then, the 1975 referendum might have seen a vote to leave at that time. People voted in that referendum on the premise that the Common Market was a good thing and most would probably say the same thing now. Trade – good. Progressive political and bureaucratic interference – not so good. That’s what Brexit is about.
Leave the fuel alone , put it on cigarette and beer spirits
Totally agree. For many fuel is a necessity, cigs & booze aren’t. Also, heavy consumers of the latter tend to cost the NHS more.
A small increase in all levels of income tax, say 1%, notionally hypothecated to fund the NHS, would be the fairest way to raise the money required without penalising the poorest in our society, who don’t pay any income tax because they don’t earn enough to pay the tax. Increasing fuel tax would disproportionately penalise the poorest in our society who would be hit hardest (as a percentage of their weekly outgoings), and impact most those who could least afford it. Mr Hammond take note.
Hmm. I could live with the extra 2p or whatever rise rather than income tax going up. Still a tough call trying to please everyone unfortunately.
The rise in fuel tax may be better for you and maybe that would be abetter option for me as I pay tax albeit only a small amount.
However the implications of 2p rise in fuel tax are much greater. Everything else will rise due to the higher delivery cost. Everything has to be delivered by a method which uses fuel of some description. Electric vehicles are unable to travel large distances and could you imagine how much more electric would have to be generated, again extra cost.
I am disabled and I am dependent on my car. I would love a micro car but need space for my wheelchair etc. 2p rise in fuel tax would cripple me further.
Extending Carney will stimulate inflation and increase pump prices through Sterling damage. If he wants to raise tax, he should fire Carney.
Sorry I disagree with the proposed changes, we already pay the second highest rate for fuel, instead of taxing us more, what about reducing the donations to other countries, 1 that springs to mind is India supposedly a poor country yet it has its own space program. If a country can afford this then its not poor. By reducing the amount of money we send just to India by 20million would solve the problem, after all I am lead to believe we send them £300 million every year!
The overseas aid budget isn’t entirely altruistic, far from it – the aim is to invest, develop, and aid, where it will generate returns for the UK, both directly from those projects (e.g. disease & pandemic research), and indirectly via reciprocity in trade, business investments, skills transfers, improved regional security, etc.
If, in the long term, we’re not getting out more than we ‘invest’ in various ways, the Department For International Development isn’t doing its job right.
Some years ago a Indian politician/business person said India didn’t want handout from Britain. that being the case, THEN THE GOVERNMANT SHOULD STOP SENDING THEM MONEY
Yes I’m afraid the old saying Charity begins at home is right.Sort out our own country first..Then we perhaps we can help others afterwards..Makes sense!
Well said Julian I agree when will this Country start to realise stop giving the millions away when it can be used at home, this Country has been a soft touch for years, lets sort our own problems out FIRST!
They always hit the motorist, they have the perfect way to raise revenue, hit the big companies who don’t pay their taxes. They say the pay the taxes that the law says, then change the laws that says they must pay 20%, the same as UK businesses.
Oh the joy of only paying £128.7 a litre. It is already 132.9 where I live and that is not in the countryside.
Diesel at my cheapest local supermarkets is now at 131.9, petrol is not far behind. That’s in Cumbria by the way, loads of rural communities dotted around all over so a lot of people have to drive further no matter what they are doing.
I was in hospital recently (A&E admission). It is a 70 mile round trip to visit, or 2 hrs on the bus (3 buses ) each way. New hospital very nice, not enough equipment, and built in the back of beyond! Cost her around £10 fuel each visit (petrol).
Cpmments?
Lower petrol prices and scrap fuel duty completely, that way people would be able to afford to travel efficiently
Idiot.
What about struggling pensioners, especially those living in rural areas where bus services have been cut to one in the morning, one in the afternoon!; then no rural post offices; no rural supermarkets and a decline in (expensive) village shops. When does the “wealthy” Chancellor and his highly-paid Whitehall cronies ever to stop to think of those in society struggling with their only means of getting out and about their car. Why not introduce a system where – on production of your Pensioners Card – you get a discount of any fuel duty increase. Or to go further, why not take away the Chancellor’s chauffer-driver limo; take away his expenses for 1st class train and air fares and his Index-linked annual pay increase and his huge “pay-off” and two thirds of his final salary when he is no longer an MP! Paul Youden – Journalist (retired)
Not cost the treasury nothing. Taxpayers money, Hmmmm how much in aid do we give away each year, government is so arrogant , bet he has never been to a petrol station in his life.
its all well and good talking about averages but in places (such as motorways) the prices are almost at £1.50 a litre, my nearest fuel station is £1.41 a litre and the cheapest is around £1.34 which is Sainsbury’s ! these people really need to open their eyes, its getting pathetic!
I suppose it was inevitable that fuel duty would increase, following the Government announcement earlier in the year that it was to increase funding for the NHS. Historically, when Governments feel a need to rake in more tax revenue, they invariably tend to knock on the motorists door first. This has been increasingly highlighted in recent years, with extra emphasis on, often unnecessary purges on things like speeding and parking. However, coming at a time when the fuel companies are blatantly ripping us all off, this will come as a bitter blow, not only for the private motorist who is helpless to do anything about it, but also industry, which will be forced to increase prices, which in turn will mean higher prices on everything we buy.
One other point that doesn’t appear to have been noticed, while fuel at the pumps has been steadily rising all this year, so has Governments VAT receipts. It was estimated as long as ten years ago, that every penny increase on the price of petrol and diesel, netted almost £2 million per DAY, in VAT take alone.
Spot on Tony, the way things are shaping up against the motorist they will soon be killing the goose that lays the golden eggs.
Make people from abroad who come here to get free treatment in our nhs hospitals pay. Pay first then treatment.
Maybe you should do some research first before commenting.
We don’t charge most because we have a mutual agreement that it’s the same when we visit them.
And the ones that don’t have to do as below.
https://improvement.nhs.uk/resources/overseas-patient-upfront-tariff/
Its not those that come from countries where we have a reciprocal arrangement that are the problem, its those that come and sponge off our NHS. Charity begins at home, there are now too many calls for additional funding for the overseas aid budget to continue at its current level
What about reducing foreign aid. after all it is money paid by poor people living in rich countries to line the pockets of rich people in so called poor countries.
Brexit savings & reducing/scrapping foreign aid i.e. we send millions to India yet they are funding a space program (?!?!) should generate more than enough funding to offset any fuel duty rises for many years to come – in fact we could probably reduce them!
I was always told ‘charity begins at home’ – let’s see the government put this into practice a bit more!
What Brexit savings are you imagining ?
The £55million per day EU membership fee for starters….
A rise in fuel duty would increase the price of everything, there are so many people struggling now, even people who do not own a car would be paying the increase in the cost of food etc.
As it is, I now use my car as little as possible because my pension does not rise with my bills. Not using my car means I do not socialise like I used to and therefore am more e. I use the bus during the day but the route does not run at the right times or places in the evening. OK I iive in a rural area but no way coud I afford to move to anywhere else.
Is there a way to generate more revenue without upsetting or angering some section of the community .You can please everyone some of the time but you cannot please everyone ALL the time An old but true saying
Take away all MPs concessions and subsidies, that should generate a good deal of cash and after living in the real world, MPs may realise the impact things such as fuel duty have on the general population
Same old excuses from the government ,more tax on the motorist who are already struggling with fuel prices .
Don’t agree with fuel price increase as this would increase the price of everything, far better one or two pence on income tax and more to the point scrap HS 2.
I agree with you,we all need the NHS so we should all pay for it NOT just the motorist.
Seems like Mr Hammond is wanting to put Labour into Government. Why would any motorist want to vote Conservative when he taxes motorists to death. He should focus on getting taxes out of the likes of Amazon, Facebook and Google who take our money and keep it in offshore tax havens. No tax or duty increases for citizens until he sorts out the likes of Amazon, Facebook and Google.
I don’t to pay more in taxes either, but, if Corbyn and McDonnell get their hands on the finances, we’ll ALL be paying a damn site more in all forms of taxation. Just be thankful for small mercies.
I wouldn’t trust either Labour or Conservatives, they’re both as bad as each other, just different ways of going about it. UK politics as a whole is a sham.
What about OAP’ motorists , I suppose the grey voters , don’t count along with poorer families, and the cash strapped paying motorist, let alone hauliers, if the chin less wonder increases fuel tax, a storm is on the horizon, that will end all storms.
Put the other side’s chinless wonder in and the economy will probably collapse – they are the cause of the present austerity.
Once again the “only ” thing to do is stuff the motorist. If this ill conceived government just kept road tax on all vehicles then there wouldn’t be such a defecit in the budget. Also set up an agency to track down people that come to this country on medical holidays. There also lots of people that would like to work in the medical sector, they could convert a building into a mock-up hospital and train people with a contract on completion of their training thus more medical staff. I know this would require an in depth study, but why not?
As usual hit the poor motorist I don’t know where they get there figures from but they are fiddled down so they can put them up stop the aid programmes and he will have more than enough for some tax cuts!!!
Expect to be screwed by the Tories one way or another whatever happens. Fed up of hearing about making cuts to overseas aid which is aimed at helping the poorest members of society. Time to cut the lavish support given to the royals. It would only make a small difference but would indicate intent.
If you think the Tories are bad then i hope we never have the present Labour party come to power, if that ever comes about then you will have something to complain about & before you think I am rich, I am a retired working man & ex shop steward.
And you probably have more than me to live on as I had to be contracted out in my work and lost most of my company pensions through redundancy, only getting the contributions back while the company kept all the interest I had accumulated – no pension transfers in those days when labour ruled.
I could get bitter – what’s the point, vote labour in and the economy will collapse and we will all have peanuts – just a minute … all animals are equal but some animals are more equal than others … well, well, well!
Unbelievable. Target the motorist yet again. How about getting all the tax due from big company’s like Google, Amazon etc. If fuel goes up everything goes up.
What most people don’t fully realise that if there is an increase in fuel duty, they will also pay me VAT on that duty! So a 2p increase will in effect be a 2.4p increase per litre! So we the motorist get hit by a double whamy & pay tax upon a tax!
Thanks for bringing that up, I’d forgotten about that. I don’t mind paying VAT on fuel but the duty is shocking. VAT & Duty combined, it is just wrong on so many levels.
Our fuel is the dearest in the world and the government expects the motorist to be a cash cow.Cuts should be made to foreign aid as a example and start funding our country.Absolutey fed up with the politicians who don’t look after our own economy and making out we are still t in the old empire ways.We are a rich country so start sharing it at home.Help our old folk and the million or so kids that are starving in the uk today .Shame on ministers and government that harm the hard workers of our nation.
My job takes me anywhere around Manchester, Merseyside and Lancashire. This thieving Government have already removed the tax relief on the mileage I put in to get to these jobs… Put the price up anymore and I will take an alternative view of my 4 hours a day travel to and from work and simply travel down the local dole office…
factor that into your calculations Hammond!
This 2ppl rise needs to stop as forecourts are putting their prices up on day to day basis to sub employees minimum wages and good few of them are rigging their pumps to?. It’s every rare to see weights and measure people checking them out?.
All forecourts must be made to show uniformed prices and stop making motorists subing staff wages & charging for oil companies to deliver?.
Hammon is bang out of order wanting up duty & vat will amount a lot more than 2 ppl?.
I will again remind you all that it take tanker ( shipping ) from the oil fields between 13 / 16 weeks to reach our shores and yet if the barrel prices go up today we motorists have a 2ppl rise at the pumps, this’s out of order 😡👎.
That’s my rant over.thank you😢
I don’t want any further increase on over 72% tax on fuel! I want fuel duty cut!! Any increase in fuel costs will fuel inflation and increase our cost of living further! Is this what we are inviting? MP’s have been receiving annual increases at more than double the rate of inflation……they can afford increases but the vast majority of the U.K. people cannot.
What about a road tax for cyclists say £5 per year.
That would make sense if we still had “Road Tax”, however, it is VED now, which doesn’t even go towards paying for road upkeep. I’m fine with cyclists roaming around tax free, although I do think they should have mandatory training and insurance akin to drivers.
Hammond……go and boil your head!
This may improve things!
knock the HS2 on the head, that’ll save some cash, its not like regular trains run on time anyway, so sort them out first… Tax the likes of Amazon etc. properly, instead of the pay what you want situation we have at the moment, that’ll get some cash in…
funny how every Government/Council service and Companies want more cash for offerering less…
It is already £1.30 per litre!
Increasing the cost of motoring is a great way of stifling the economic activity that’s needed to generate the funds to support government. Try the Trump approach – cut taxes and see a big increase in GDP.
Once again the family motorist is easy meat. Why not reduce the enormous benefit payments that are paid to lazy people who find ways of not working. How are pensioners going to survive. The annual increase in State Pensions would just about buy a litre of fuel. Please sort out this mess. As pensioners we do not have an expenses account. We have to survive on what this government leaves us. Signed: Disgussted
So what is different to the last government – ah yes, they saddled us with rising debt and said we were doing fine —- “£$%^&* liars, and people want to vote them in again!!!!
We have managed quite well without the increased in fuel duty and hopefully will be able to do so for some time to come. Instead of again looking at the British motorists why doesn’t the Chancellor look to the foreign motorists who come into our country and pay nothing towards it. I for one know of several foreign haulage companies who refuse pint blank to pay for fuel in this country and some don’t even pay toll fees and get away with it.
Every week we see thousands of hgvs going from the ferry ports in the south up the M6 and M54 onto the A5 to catch another ferry to Ireland. Only the minority will stop to refuel.
Once again a rich chancellor that is out of touch with reality and using the motorist as a cash cow. I am one of the poor pensioners mentioned below that has no alternative but to run a car because we have no bus service. Our two local banks have now close and like many others no post office or facilities. I did not work all my life to be left waiting to see doctors and nurses, with long delays to try and get some services from the NHS whilst my hard earned taxes are sent abroad to countries that either don’t need it (e.g India) or to line the pockets of despots, whilst my wife and I are given a derisory pension rise to cover not just getting around but also THE VERY FOOD TO GO IN OUR MOUTHS.
Typical well paid MP’s remote from reality.
One thing is for sure, we can scribe to columns such as this but they will neither read nor care about what is written.
Just another thought whilst on my horse. INSURANCE!! Why can’t the Emergency Services reclaim through insurances when called to crimes, motor accidents and fire etc.?
Haha ha here’s a thought make the companies such as Amazon. Costa coffe, Google etc pay what they should instead of coming to deals with the tax man and paying what they want that itself would make up more than the shortfall for the NHS and by some measure.
My solution in my 2 car household has been to buy an EV. Might not be for everyone but I’m saving £160 a month in fuel and most of that is tax. still have a second people carrier for the family but my commuter car is electric and I charge for free at work. Even if I charged at home though it would be far cheaper than diesel or petrol. Yes, I know it wont work for everyone but fuel tax was one of the prime reasons I got rid of my diesel commuter. #taxationistheft.
So the Government is doing a big push for electric cars (where all the power comes from and how to recharge in rural areas is another question).
Has government twigged that it will lose revenue that comes from fuel tax just like it has lost from the road fund license by pushing people from gas guzzlers , via the push to diesel vehicles. All short-term knee-jerk actions that are ill thought out in terms of detail…
You can rest assured they will find a way to recoup the lost revenue when the number of Electric cars on the road reaches a number to justify it.
NO THE SCAMMING TORYS ARE ONLY INTERESTED IN FILLING THERE OWN POCKETS WE PAY WAY TOO MUCH.IN PETROL THEY SHOULD BE BRINGING THE PRICE OF PETROL DOWN NOT PUTTING IT UP THIS COUNTRY IS DISGUSTING SCAMMING THE PEOPLE WHEN ITS HARD ENOUGH TO EARN GET RID OF THESE ASSES..
NO THE SCAMMING Labour ARE ONLY INTERESTED IN FILLING THERE OWN POCKETS by increasing the national debt to more than that of Greece WE PAY WAY TOO MUCH.IN PETROL THEY SHOULD BE BRINGING THE PRICE OF PETROL DOWN NOT PUTTING IT UP THIS COUNTRY IS DISGUSTING SCAMMING THE PEOPLE WHEN ITS HARD ENOUGH TO EARN GET RID OF THESE ASSES and replace them with who?..
Time for a Revolution people….
I have an idea. Instead of the perpetual persecution of the motorist, because they’re such an easy target, why not cut billions in benefits first? After all, generally speaking, the motorist is usually working, thus paying into the system (or if retired and can afford to run a car, have done so for many years), whereas there are thousands of scroungers who have paid nothing in but get loads out.
I do not have the slightest problem with genuine cases, but just because someone couldn’t sit at a desk for eight hours, or do hard manual work for eight hours doesn’t mean that they can’t do work of some kind.
But the motorist wouldn’t notice a 2ppl rise after a while would they? Whereas cutting the benefits bill wouldn’t win them votes from the lazy would it? After all, the vast majority of our corrupt, self-serving politicians are in the game for one thing. Themselves.
fuel duty rise is NEVER justified. why hit those who can afford it least, especially when in some areas there are NO alternatives? ‘zero’ emissions cars are anything BUT zero emissions (transporting them, production pollution etc) why not tax those who can afford it or a blanket tax that WILL be paid into by EVERYONE rather than this limited, blinkered, easy target, the motorist?
Go on rob the motorist again as they are the easiest target, if it’s for NHS and Social Care it should be paid through NI contributions, how about those who earn over about £43K having the reduction of NI contributions removed and let them pat the full 12% like the lower paid have to instead of the reduced rate of just 2%, thought not that will hit the well off like those imposing the tax on the lower paid, as for making the retired who are still working pay NI that if imposed should be at a reduced rate as they have already paid in for 50 years. Why don’t self employed have to pay the 13% employers NI plus the 12% employee NI as there are plenty self employed doing very well, it could be a lower rate for those earning under say £20K to help those on zero hour contracts on lower income.
Firstly i would like to know where you can buy fuel for 128.7ppl where i live it hasn’t been that price for years. My local filling station is charging 136.9ppl for unleaded and 139.7ppl for diesel and they are the cheapest around. Why not take some of the money from the franchises that are charging extortionate prices to the public. I drove down the motorway yesterday and saw diesel priced at 152.9ppl. (ridiculous) Fuel should be same price around the country and not a way of money making for a government that cant get its books in order.
As we ‘enjoy’ the current highest rate of fuel duty in Europe this has got to be a non-starter. The effect on those in rural areas, combined with loss of public transport and cuts in school transport will be horrendous, not to mention a massive vote loser. As the chancellor is very pro Europe it will probably go through as publicity for the’fright’ programme being pushed by the pro Euro brigade.