Labour under pressure to slash fuel duty as AA demands urgent Budget action

Fuel prices have risen to record levels in recent months as a result of the war between the United States and Iran, sending oil costs soaring.

Diesel hit an all-time peak of 200.01p per litre earlier this month, with an average 55-litre car costing £110 to fill.

While petrol prices have not reached all-time highs, drivers are still facing high costs when visiting the pumps up and down the country.

The AA is now calling on Chancellor John Healey to extend the 5p fuel duty cut in the Budget, and even cut it by a further 5p per litre.

It warned that reversing the existing reduction would hammer drivers at a time when pump prices have already dominated finances.

The 5p per litre fuel duty cut was introduced in the aftermath of the Russian invasion of Ukraine, which prompted the last peak in petrol and diesel prices.

The 5p cut has been extended every year since, across both Conservative and Labour governments, although this could now be in jeopardy.

Former Prime Minister Sir Keir Starmer announced earlier this year that the Government would extend the fuel duty cut until the end of 2026.

However, it is set to rise by 3p on January 1, 2027, while the full 5p cut will be axed by March in a further blow to drivers.

The AA highlighted that an extra 5p cut would be worth around 6p per litre at the pump if it is to be passed on in full.

This would represent savings of around £3.30 when filling a standard 55-litre tank, easing the burden of the cost of living crisis on motorists.

Previous analysis from the AA found that more than 2,500 filling stations around the UK were already charging £2 per litre or more for diesel at the start of October.

AA President Edmund King said: “Drivers need the Chancellor to put the brakes on rising fuel costs.

“The first step must be keeping the existing 5p fuel duty cut, but with prices rising, we believe the Chancellor should go further and cut another 5p.

“Fuel prices aren’t just an issue for motorists. Higher prices increase the cost of moving goods, making deliveries and running businesses, with those costs ultimately finding their way into household bills.

“As underlying fuel prices rise, the Treasury also receives more VAT. We believe the Chancellor should take that additional revenue into account and use the Budget to give drivers and businesses some breathing space.”

A Government spokesperson said that any decision on fuel duty, or any other taxes, would be announced in the Budget.