As the Labour government prepares to unveil its first Autumn Budget on October 30th, attention will be on Chancellor Rachel Reeves’ key decision on fuel duty. With relatively low fuel prices and inflation back under 2%, the new government faces pressure to reconsider the fuel duty cut introduced by the previous Conservative administration.
In March 2022, amid surging oil prices and high inflation, the Conservative government implemented a 5 pence per litre (ppl) cut in fuel duty on petrol, diesel, and other fuels to help households and businesses cope with rising costs. Initially intended to last 12 months, the cut was extended in 2023, with an expiration date of March 2025.
With a new Labour government in place, there are growing signs that this deadline could be brought forward. The economic landscape has shifted significantly since the initial cut. Fuel prices have dropped back to three-year lows, and inflation is under control.
The freeze on fuel duty has come at a substantial cost to the Treasury. According to the Office for Budget Responsibility (OBR), the extension of the 5ppl cut was forecast to cost the government £3.09 billion in lost revenue for 2024-2025 alone. With public services requiring more funding and fiscal pressures mounting, Labour may be inclined to bring forward the end of the freeze to start recouping these revenues sooner.
The OBR had previously estimated that ending the freeze in 2025 would increase the Consumer Price Index (CPI) by 0.1 percentage points, but the impact could be smaller if action is taken while inflation remains low.
Ending the freeze earlier could significantly boost the public finances, allowing the government to fund its policy commitments, including investment in public services, green energy, and infrastructure projects. It would also align with Labour’s focus on fiscal responsibility and balancing the books after years of high spending.
However, Labour must also consider the political implications of this move. While fuel prices are lower currently, any price increases could still affect key constituencies, particularly in rural areas where driving is essential.
In addition to the fuel duty cut in 2022 the then Chancellor Jeremy Hunt also cancelled the planned inflation increase. This too may be bought back by Reeves, adding further costs to UK motorists.
The last time fuel duty was below current levels was back in 2009 before the April increase from 52.35ppl to 54.19ppl. Following this, they rose to their highest levels in January 2011, where they were set at 58.95ppl. With fuel duty currently at 52.95ppl, inflation low, and unleaded and diesel prices low, the door is open for the increase to happen this October.
However, there has been a tendency for duty increases to occur in the spring, with seven of the last ten duty changes (all fuel types) occurring between January and May. In addition, there is already an expiry date set on the duty cut of March 2025, at which point it is set to go back to the previous level of 57.95ppl. Increasing fuel duty ahead of a winter where winter fuel allowances have already been cut is likely to be a very unpopular move from a government already under pressure.
When will the fuel duty change take affect?
If the duty is changed in the budget, it may take effect the same day. Historically duty changes have happened at 6pm on the day of the announcement.
The PetrolPrices app timestamps all the prices, so please take the time of the last update into account when reviewing pricing.
Should I fill my car before the budget?
Yes. Although we don’t know if fuel duty will change in the budget, the current outlook for pricing is relatively flat, with Brent crude trading at $75. It has been trading between $70 and $80 for the month of October. With large price increases looking unlikely between now and the end of the month, the only major risk for large price increases appears to be an increase in fuel duty. With that in mind, there appears to be little reason to hold off filling up until after the budget.