Fuel duty

[Shrop]

Politicians are usually scared of increasing fuel duty in case it risks losing votes, but Labour are already struggling on this front.

As I understand it, just 5p on a litre of petrol could raise around £3bn per year for the UK's beleaguered coffers, and when Labour came to power this was widely expected, but they chose not to do it. So why not now?

Of course the Daily Mail etc would vilify them but they do that anyway, so why not use this means of raising money?

At least drivers have an element of choice about using fuel, more so than many others who face having money clawed off them ...

 

[Mgameing123]

Politicians are usually scared of increasing fuel duty in case it risks losing votes, but Labour are already struggling on this front.
As I understand it, just 5p on a litre of petrol could raise around £3bn per year for the UK's beleaguered coffers, and when Labour came to power this was widely expected, but they chose not to do it. So why not now? Of course the Daily Mail etc would vilify them but they do that anyway, so why not use this means of raising money? At least drivers have an element of choice about using fuel, more so than many others who face having money clawed off them ...

Well I think you answered it yourself. If they lose too many votes on the policy, then they wonøt do it. Even though Labour already has done some really poor decisions in that front.

 

[Shrop]

Well I think you answered it yourself. If they lose too many votes on the policy, then they wonøt do it. Even though Labour already has done some really poor decisions in that front.

My point is, is it really that much of a vote loser compared to other policies which are losing votes?

I'm not at all convinced about why a few pence on fuel is perceived as such a vote loser.

Yes, of course people love to complain about the price of fuel, but in practice and after some whingeing, most people would still use their cars almost as much if fuel was £2 a litre.

Most people happily pay £thousands extra for car capabilities that they never use (eg 4WD in London), it's only the perception that needs addressing.

Don't forget, if fuel prices had kept up with inflation over the last 10-15 years, it would already be £2 per litre.

 

[Mgameing123]

My point is, is it really that much of a vote loser compared to other policies which are losing votes? I'm not at all convinced about why a few pence on fuel is perceived as such a vote loser. Yes, of course people love to complain about the price of fuel, but in practice and after some whingeing, most people would still use their cars almost as much if fuel was £2 a litre. Most people happily pay £thousands extra for car capabilities that they never use (eg 4WD in London), it's only the perception that needs addressing. Don't forget, if fuel prices had kept up with inflation over the last 10-15 years, it would already be £2 per litre.

There is also the point that higher fuel prices causes inflation because now businesses need to use more money annually on increased fuel costs. It does sound like a good idea but you need to also look the consequences. First we need to see how would this policy affect inflation and the cost of living?

 

[Shrop]

There is also the point that higher fuel prices causes inflation because now businesses need to use more money annually on increased fuel costs. It does sound like a good idea but you need to also look the consequences. First we need to see how would this policy affect inflation and the cost of living?

There's a lot more to inflation and the cost of living than just fuel prices. I reiterate that a lot of this is about perception.

 

[Magdalia]

There is also the point that higher fuel prices causes inflation because now businesses need to use more money annually on increased fuel costs. It does sound like a good idea but you need to also look the consequences. First we need to see how would this policy affect inflation and the cost of living?

This is the right answer. Fuel duty wasn't increased last year because of the impact on inflation, and I doubt that it will be increased this year either.

Last time I looked fuel was about 3% of the "basket of goods and services" in the main price indices CPI and RPI. But the overall impact is bigger than that because of second order effects: businesses that use a lot of fuel put their prices up too to preserve their profit margins.

Higher CPI/RPI hits the government's finances directly in many ways from benefit payments linked to price indices to interest payments on government debt (about a quarter of government debt is index linked to RPI). Furthermore the Bank of England has a 2% CPI target, yet CPI is currently running at 3.8%: the government needs CPI to come down so that the Bank of England can reduce interest rates.

There's a lot more to inflation and the cost of living than just fuel prices. I reiterate that a lot of this is about perception.

This isn't perception, it is economic reality.

 

[Shrop]

This is the right answer. Fuel duty wasn't increased last year because of the impact on inflation, and I doubt that it will be increased this year either.

Last time I looked fuel was about 3% of the "basket of goods and services" in the main price indices CPI and RPI. But the overall impact is bigger than that because of second order effects: businesses that use a lot of fuel put their prices up too to preserve their profit margins.

Higher CPI/RPI hits the government's finances directly in many ways from benefit payments linked to price indices to interest payments on government debt (about a quarter of government debt is index linked to RPI). Furthermore the Bank of England has a 2% CPI target, yet CPI is currently running at 3.8%: the government needs CPI to come down so that the Bank of England can reduce interest rates.


This isn't perception, it is economic reality.

No. Getting to places for work is an essential, or for medical reasons or shopping etc. Getting to places for leisure purposes less so, but still important for many. However, getting there in cars which have a host of extra features is not essential, it's a luxury of modern times and privileges.

If people want to spend their money on these things then they forfeit their right to complain about fuel prices. Perhaps only those who run basic and/or older cars should be complaining about fuel prices?

 

[The Planner]

No. Getting to places for work is an essential, or for medical reasons or shopping etc. Getting to places for leisure purposes less so, but still important for many. However, getting there in cars which have a host of extra features is not essential, it's a luxury of modern times and privileges.
If people want to spend their money on these things then they forfeit their right to complain about fuel prices. Perhaps only those who run basic and/or older cars should be complaining about fuel prices?

34 million registered cars in the UK, I don't call it a luxury and its always going to be a vote decider. 1.8 million new vehicles have been estimated registered so far this year, 370,000 of those being zero emission.

https://assets.publishing.service.gov.uk/media/68e5158e750fcf90fa6ffeb5/veh9902.ods

 

[stevieinselby]

There is also the point that higher fuel prices causes inflation because now businesses need to use more money annually on increased fuel costs. It does sound like a good idea but you need to also look the consequences. First we need to see how would this policy affect inflation and the cost of living?

For any goods, or any services that aren't directly related to transportation, an extra 5p/litre on fuel will make absolutely minimal difference to the prices. Yes, lorries and other vehicles use fuel to move components and goods and people around ... but in the wider context of the cost of all the raw materials, labour and staffing, infrastructure and machinery, international transport, and not to mention the profits that need to be taken ... the diesel used on UK roads is a tiny proportion of the cost to the consumer, and so a 3% increase in that tiny proportion will be lost in the noise.

If people want to spend their money on these things then they forfeit their right to complain about fuel prices. Perhaps only those who run basic and/or older cars should be complaining about fuel prices?

In particular, anyone who drives an SUV or similarly outsized vehicle at 80+ on the motorway has absolutely forfeited the right to complain.

 

[PGAT]

Does anyone have the right to complain about this? Public transport fares can’t catch a break year after year but its such a travesty and vote loser when fuel duty gets changed once in two decades?

 

[Railwaysceptic]

No. Getting to places for work is an essential, or for medical reasons or shopping etc. Getting to places for leisure purposes less so, but still important for many. However, getting there in cars which have a host of extra features is not essential, it's a luxury of modern times and privileges.
If people want to spend their money on these things then they forfeit their right to complain about fuel prices. Perhaps only those who run basic and/or older cars should be complaining about fuel prices?

Do you have a car? Are you volunteering to pay more in tax or are you merely demanding that other people pay more?

Everything you buy in shops was delivered there by road. Your local supermarket is not rail connected. If vehicle duty is increased, that increase will be passed on to customers, many of whom are short of money. If they are forced to spend more, they will have to spend less on other things, and that will have an economic effect. The last budget increased taxes and the consequences have not been good for the economy. The only merit in your argument is that, because the credibility of tax increases in general has been damaged, any such increases in the forth-coming budget will be unpopular and the Chancellor will be vilified whatever she chooses to do.

 

[Magdalia]

No. Getting to places for work is an essential, or for medical reasons or shopping etc. Getting to places for leisure purposes less so, but still important for many. However, getting there in cars which have a host of extra features is not essential, it's a luxury of modern times and privileges.
If people want to spend their money on these things then they forfeit their right to complain about fuel prices. Perhaps only those who run basic and/or older cars should be complaining about fuel prices?

You are completely missing the point. Fuel duty increase is unlikely to happen because of its impact on the main price indices and how they are embedded in fiscal and monetary policy. Whether people's journeys are essential or discretionary is irrelevant.

For any goods, or any services that aren't directly related to transportation, an extra 5p/litre on fuel will make absolutely minimal difference to the prices. Yes, lorries and other vehicles use fuel to move components and goods and people around ... but in the wider context of the cost of all the raw materials, labour and staffing, infrastructure and machinery, international transport, and not to mention the profits that need to be taken ... the diesel used on UK roads is a tiny proportion of the cost to the consumer, and so a 3% increase in that tiny proportion will be lost in the noise.

The first order effect is the most important, but for fuel the second order effect does matter too. Most goods distribution is by road, and fuel is a big cost for lots of services delivered in the home by car or van. For each individual supplier the impact may be small, but it will feed through into prices, and, because it is so widespread across the economy, it does matter in aggregate too.

 

[Snow1964]

I think fuel duty rises tend to be inflationary and thus have many negative side effects.

More likely they will do more to increase tax on anything but essential smaller car used by rural folk, more tax on bigger or more expensive vehicles etc. Even increased road tax or tax on permit parking for those parking on road could be options (which would probably be dressed up as helping public transport or cutting congestion).

They could also cut some of the motor trade perks/loopholes (low benefit in kind etc) or reduced VAT on company cars or some form of leasing tax etc. There might be short term ructions with reduced supply of nearly new cars but it will sort itself out within few months as the pricing gets reorganised and people still replace vehicles.

In some ways it is more palatable to have future duty rises, people tend not to protest at something not affecting them now, and by the time it happens just see it as a price rise, not extra tax.

 

[Shrop]

Do you have a car? Are you volunteering to pay more in tax or are you merely demanding that other people pay more?

Everything you buy in shops was delivered there by road. Your local supermarket is not rail connected. If vehicle duty is increased, that increase will be passed on to customers, many of whom are short of money. If they are forced to spend more, they will have to spend less on other things, and that will have an economic effect. The last budget increased taxes and the consequences have not been good for the economy. The only merit in your argument is that, because the credibility of tax increases in general has been damaged, any such increases in the forth-coming budget will be unpopular and the Chancellor will be vilified whatever she chooses to do.

I do have a car and I'd be totally willing to pay more for my fuel so long as everyone else also has to. The benefits it could and should bring to other parts of our economy, along with other sacrifices that would no longer be necessary, would be completely worth it.

== Doublepost prevention - post automatically merged: 31 Oct 2025 ==

For any goods, or any services that aren't directly related to transportation, an extra 5p/litre on fuel will make absolutely minimal difference to the prices. Yes, lorries and other vehicles use fuel to move components and goods and people around ... but in the wider context of the cost of all the raw materials, labour and staffing, infrastructure and machinery, international transport, and not to mention the profits that need to be taken ... the diesel used on UK roads is a tiny proportion of the cost to the consumer, and so a 3% increase in that tiny proportion will be lost in the noise.


In particular, anyone who drives an SUV or similarly outsized vehicle at 80+ on the motorway has absolutely forfeited the right to complain.

Absolutely. I only wish more people were willing to think this through properly!

== Doublepost prevention - post automatically merged: 31 Oct 2025 ==

You are completely missing the point. Fuel duty increase is unlikely to happen because of its impact on the main price indices and how they are embedded in fiscal and monetary policy. Whether people's journeys are essential or discretionary is irrelevant.


The first order effect is the most important, but for fuel the second order effect does matter too. Most goods distribution is by road, and fuel is a big cost for lots of services delivered in the home by car or van. For each individual supplier the impact may be small, but it will feed through into prices, and, because it is so widespread across the economy, it does matter in aggregate too.

You're falling into the trap set by the roads lobby, which most politicians and reporters subscribe to. The system needs changing so that driving becomes just a bit less taken for granted by most people
Yes of course cars should be available to everyone, but in practice it's an abused privilege for many reasons. Start by using fuel duty to subsidise essential freight. The whole process needs a re-think, what it doesn't need is people being quite so subservient to their cars and finding every excuse under the sun to use them. Pandering to cars to the excessive extent that we do is quite a weakness.

 

[stevieinselby]

The first order effect is the most important, but for fuel the second order effect does matter too. Most goods distribution is by road, and fuel is a big cost for lots of services delivered in the home by car or van. For each individual supplier the impact may be small, but it will feed through into prices, and, because it is so widespread across the economy, it does matter in aggregate too.

If fuel for road transport is that big a factor in the cost of producing goods then that says that the logistics behind it are poor. If this incentives people to buy products that are made locally and not shipped around, if it discourages people from having everything delivered to their front door by a diesel van, then that is all to the good. The mileage that delivery vans cover collectively is insane, compare it to just 10 years ago – we don't need that level of convenience, if we want it then we have to be prepared to pay for it.

 

[The exile]

The psychological aspect is that the price of fuel is the one thing that is displayed in large figures for everyone passing to see. Nowhere is a 5p price hike (and I’m in favour, btw) more obvious.

 

[HSTEd]

If fuel for road transport is that big a factor in the cost of producing goods then that says that the logistics behind it are poor. If this incentives people to buy products that are made locally and not shipped around, if it discourages people from having everything delivered to their front door by a diesel van, then that is all to the good. The mileage that delivery vans cover collectively is insane, compare it to just 10 years ago – we don't need that level of convenience, if we want it then we have to be prepared to pay for it.

Making sensible assumptions about how people travel to go shopping, home delivery absolutely crushes the shop model in carbon emissions terms.

By far the most time and effort efficient way to shop in a world with refrigeration is to shop irregularly using a car to move large quantities of shopping.
The world of the 50s where expensive goods were stocked in dozens of shops near people, manned by very cheap labour, is gone and will not be coming back.

The users of the road system already easily cover the costs of operating the systme, and the entire road system costs about as much as it spends subsidising the railway.

 

[The exile]

By far the most time and effort efficient way to shop in a world with refrigeration is to shop irregularly using a car to move large quantities of shopping.
The world of the 50s where expensive goods were stocked in dozens of shops near people, manned by very cheap labour, is gone and will not be coming back.

You’re probably right on balance - but like lots of arguments about efficiency, you’re viewing the activity in isolation purely as something that costs time and effort (as well as money). Combined with other activities / needs the “less efficient” way of shopping may actually prove to be advantageous.

 

[OhNoAPacer]

I believe that the Chancellor missed a chance to raise some money for reduced political damage by not partially eliminating the temporary 5p reduction in fuel duty that Philp Hammond introduced.
It had been expected that she would have stopped this, and if she had said something like "The state of the finances inherited from the previous government mean that the temporary fuel duty reduction cannot be afforded. However being aware that people are struggling I am not completely abolishing it but instead amending the reduction to 3p".

 

[weeklycommuter]

34 million registered cars in the UK, I don't call it a luxury and its always going to be a vote decider. 1.8 million new vehicles have been estimated registered so far this year, 370,000 of those being zero emission.

The RAC hinted last year that they did not oppose ending the "temporary" 5p cut in fuel duty introduced in 2022 because they claimed retailers had failed to pass on lower petrol and diesel prices to motorists and instead boosted their own profits.

Fuel duty cut could be scrapped, says RAC

The motoring group claims retailers not drivers have benefitted from lower tax on petrol and diesel.

www.bbc.co.uk

Fuel duty cut could be scrapped, says RAC
Dearbail Jordan Business reporter, BBC News
Published 29 August 2024
A 5p cut in fuel duty is expected to be scrapped in the upcoming Budget, according to the RAC motoring organisation, because drivers are not gaining any benefit.
The RAC has claimed that retailers have failed to pass on lower petrol and diesel prices to motorists and instead have boosted their own profits.
On Wednesday, Prime Minister Sir Keir Starmer refused to rule out a rise in fuel duty in the forthcoming Budget.
Chancellor Rachel Reeves will set out Labour's first Budget on 30 October, which Sir Keir has warned "will be painful".
Fuel duty has been frozen for more than a decade under the Conservative government. In 2022, the then chancellor Rishi Sunak cut it by 5p per litre. That was extended until March next year.
Simon Williams, head of policy at the RAC, said Ms Reeves "knows the 5p discount is losing the Treasury £2bn a year".
The UK's competition watchdog recently found that drivers were still paying too much for fuel, costing them £1.6bn in 2023.
Consequently, the RAC said it had reached the conclusion that Ms Reeves "has no option but to put fuel duty back up".
“We’d normally be against any increase in duty," said Mr Williams. "But we’ve long been saying drivers haven’t been benefitting from the current discount due to much higher-than-average retailer margins."

 

[35B]

Politicians are usually scared of increasing fuel duty in case it risks losing votes, but Labour are already struggling on this front.
As I understand it, just 5p on a litre of petrol could raise around £3bn per year for the UK's beleaguered coffers, and when Labour came to power this was widely expected, but they chose not to do it. So why not now? Of course the Daily Mail etc would vilify them but they do that anyway, so why not use this means of raising money? At least drivers have an element of choice about using fuel, more so than many others who face having money clawed off them ...

I suggest you look at what happened when Tony Blair pushed fuel duties. When fuel duties are already at a high level by comparison to other countries, and inflation is already above target, raising costs directly would be extremely courageous.

 

[Peter Mugridge]

The RAC hinted last year that they did not oppose ending the "temporary" 5p cut in fuel duty introduced in 2022 because they claimed retailers had failed to pass on lower petrol and diesel prices to motorists and instead boosted their own profits.

The obvious thing to do, surely, is to reverse that 5p cut and make it abundantly clear in public to the petrol companies that because the saving was never passed on to customers, the reversal must not be passed on to customers - and that every bit of extra profit they have gained since 2022 as a result of that failure to pass on the cut must be handed over to H.M Treasury as an immediate one off lump sum...................

 

[Bald Rick]

When fuel duties are already at a high level by comparison to other countries,

They are not though.

UK fuel duty on petrol is a shade under 53p a litre. Compared to our near neighbours and simiarly sized economies in Europe, we are cheap. Personally I think there is room for 4p this year, and another 4p next, which would bring us into line with others, and would not be inflationary in year two, indeed it would be deflationary at the end of year two, ie end of 2027, just in time for an election.

Ireland 62p
France 60p
Germany 57p
Netherlands 69p
Denmark 60p
Italy 64p

== Doublepost prevention - post automatically merged: 31 Oct 2025 ==

The obvious thing to do, surely, is to reverse that 5p cut and make it abundantly clear in public to the petrol companies that because the saving was never passed on to customers

It was passed on though.

 

[Peter Mugridge]

It was passed on though.

Then why does everyone say it wasn't?

 

[Oxfordblues]

Successive governments' failure to increase fuel duty over many years and the almost-total absence of toll booths on motorways amount to a massive hidden subsidy to the UK's road haulage industry. If hauliers had to pay the true costs of road maintenance, accidents, policing and pollution they would have to raise their rates to such a level that rail freght could once again compete on flows in less-than-trainload volumes.

 

[JamesT]

Then why does everyone say it wasn't?

Are you remembering news stories from immediately after the cut? Prices didn't immediately fall, partially due to oil prices rising at the same time, and also as fuel that had the higher rate applied worked its way through the system.
A few months later, the Competitions and Markets Authority stated: (https://www.bbc.co.uk/news/business-62090621)

However, it said retailers had passed on a 5p fuel duty cut to motorists.

 

[AlterEgo]

My point is, is it really that much of a vote loser compared to other policies which are losing votes? I'm not at all convinced about why a few pence on fuel is perceived as such a vote loser. Yes, of course people love to complain about the price of fuel, but in practice and after some whingeing, most people would still use their cars almost as much if fuel was £2 a litre.

If that is true - and that's a big if - fuel is such a large expense for many families (the vast majority of whom have access to a car) that they would cut spending elsewhere to afford it, which isn't great for the economy either.

 

[35B]

They are not though.

UK fuel duty on petrol is a shade under 53p a litre. Compared to our near neighbours and simiarly sized economies in Europe, we are cheap. Personally I think there is room for 4p this year, and another 4p next, which would bring us into line with others, and would not be inflationary in year two, indeed it would be deflationary at the end of year two, ie end of 2027, just in time for an election.

Ireland 62p
France 60p
Germany 57p
Netherlands 69p
Denmark 60p
Italy 64p

And the comparison with the US?

As it happens, I have a wider problem with duty taxes and their independence of true cost - which is what leads to this conversation. A value based tax would, to me, be much clearer and fairer - and link the government's take to the underlying cost of the product. (Yes, I do also understand the advantages of duty for cheap collection of tax).

I don't know what increase would or wouldn't be politically palatable - but I suspect with inflation already stuck at 3.5%, the combination of a political backlash and injecting additional inflation into CPI, will not be on HM Treasury's wishlist.

 

[Peter Mugridge]

Are you remembering news stories from immediately after the cut?

No, I'm going by what is often repeated on here, Twitter, Bluesky, everywhere as well as the occasional news report still stating it!

I hadn't actually seen that CMA statement until you posted it just now...

 

[35B]

My point is, is it really that much of a vote loser compared to other policies which are losing votes? I'm not at all convinced about why a few pence on fuel is perceived as such a vote loser. Yes, of course people love to complain about the price of fuel, but in practice and after some whingeing, most people would still use their cars almost as much if fuel was £2 a litre. Most people happily pay £thousands extra for car capabilities that they never use (eg 4WD in London), it's only the perception that needs addressing. Don't forget, if fuel prices had kept up with inflation over the last 10-15 years, it would already be £2 per litre.

Just look at what happened to a much stronger Labour government in 2000, and how they were forced to back down.