Calls to Extend Fuel Duty Cut Amid Rising Petrol Prices
The prime minister's cost-of-living adviser has urged the government to consider extending the current fuel duty cut, following a surge in petrol prices linked to the conflict involving the US, Israel, and Iran.
Lord Walker, who advises Sir Keir Starmer on cost-of-living issues, joined others in advocating for the 5p per litre fuel duty reduction to remain beyond its scheduled expiry in September, after being in place for over four years.
"I think given where we are, we do need to be thinking and talking about extending it or enlarging it,"
the Labour peer stated during an interview on BBC Radio 4's Today programme on Friday.
Sir Keir Starmer has previously indicated that the planned increase in fuel duty would be kept under review in light of developments in Iran.
Background of Fuel Duty Cut
The reduced tax rate on petrol and diesel was initially introduced by the previous Conservative government in response to the sharp price increases caused by Russia's full-scale invasion of Ukraine in 2022.
Fuel prices have risen again after Iran effectively blocked the Strait of Hormuz, a critical shipping lane through which approximately one fifth of the world's oil and gas passes. This action was in retaliation to attacks from the US and Israel.
International Responses to Fuel Price Increases
Lord Walker, who also serves as the executive chairman of Iceland supermarkets, highlighted recent measures taken by other countries to alleviate fuel costs.
"The Australian government had recently taken a 14p litre cut to their fuel tax,"
he noted. He further suggested that there may be justification for reducing fuel tax rates in the UK to ease expenses for both businesses and consumers.
Various nations have adopted different strategies to address the energy crisis triggered by the Middle East conflict. Ireland has reduced taxes on petrol and diesel, Australia has halved fuel duty for three months, and Slovenia became the first European Union member state to implement fuel rationing.
Additionally, Egypt has instructed shops, restaurants, and cafes to reduce energy consumption by closing earlier than usual.
Political Perspectives and Government Measures
On Wednesday, Sir Keir acknowledged the challenges posed by the economic impact of the Iran conflict, stating that managing these consequences would "not be easy."
To date, the Labour government has announced additional financial support for individuals who rely on heating oil.
A new energy price cap, which limits the maximum charge providers can impose per unit of gas and electricity, came into effect on 1 April.
However, energy bills are expected to increase significantly when the next price cap is implemented in July, due to the rise in oil prices since the onset of the Middle East conflict.
Chancellor Rachel Reeves emphasized that any further assistance would be targeted at those most in need.
A Treasury spokesperson commented:
"We have the right economic plan for a more volatile world, taking a responsible approach to supporting working people in the national interest.
Fuel duty is frozen until September and we're enabling targeted support for those facing higher heating oil costs. We're also acting to protect people from unfair price rises if they occur and to bring down food prices at the till."
Political Debate Over Fuel Duty Cut Extension
Lord Walker is the latest political figure to advocate for maintaining the fuel duty cut beyond September.
Some Labour MPs have privately questioned why Sir Keir has not yet committed to cancelling the planned increase, while opposition parties have called for additional cost-of-living support to counteract the surge in oil prices.
The Conservative Party, Reform UK, and the Liberal Democrats have all argued that the ongoing conflict in Iran justifies keeping the fuel duty cut in place.
Conservative leader Kemi Badenoch predicted that Sir Keir would be compelled to announce "another humiliating U-turn" and has also called for reductions in taxes on energy bills.
Rather than waiting until September, Liberal Democrat leader Sir Ed Davey has urged the government to implement an emergency 10p cut to fuel duty immediately.
Reform UK's Treasury spokesman Robert Jenrick has also called on the government to halve VAT on petrol for a period of three months.
The Green Party of England and Wales recommended that the government prepare plans to cover potential energy bill increases of up to £300 per household.
The Scottish National Party (SNP) advocates for devolving energy policy to the Scottish Parliament in Holyrood and argues that Scottish independence would help reduce energy bills.
Meanwhile, Plaid Cymru has emphasized that long-term investment in renewable energy would help shield consumers from future price hikes.
