Chancellor Rachel Reeves is ditching the hike. She’s scrapping plans to pull up the drawbridge on the temporary fuel duty cut.
The move lands on Thursday. It costs £2.4 billion.
Taxpayers eat that loss so drivers don’t have to. People are already squeezing every penny for tank fills, sparing them more pain seems like a win.
It hasn’t been a quiet battle. Reeves signaled months ago she wanted to unwind the 5p cut—a relief measure from the old Conservative government in March 2021 meant to cushion drivers after Russia moved into Ukraine.
Critics pounced. Fierce opposition. Noise.
The original blueprint was brutal in its incrementalism. September 2026. Cut drops to 4p. December? Down to 2p. By March next year, gone entirely. No discount.
And just when fuel prices were stabilizing? No. Tensions in the Middle East spiked. The Iran conflict sent shocks through global oil markets. RAC Fuel Watch pegged average petrol at 157.9p last week, diesel at 186.6p. Only barely below mid-April peaks. A drop from a high that wasn’t much higher in the first place.
Reeves saw the writing on the wall. Or maybe she saw the ONS figures. Either way, she spoke out. “I look forward to setting those [new support plans] out,” she said last week, hinting the hardline approach was dead.
Labour’s fuel tax hike would hurt businesses
Shadow Chancellor Mel Stride smelled blood. Then smelled victory. He told Auto Express that Labour’s hike was going to “hammer” families. “After Conservative pressure, it looks like Reeves has U-turned,” he said.
Maybe.
Don’t get too excited. This isn’t a permanent gift. Reeves likely restarts the unwinding in March next year during the Spring Statement. Plus, come next month, standard inflation adjustments kick in.
2p more per litre. Automatically.
The Treasury stayed mum. Refused comment.
But the damage is done. £2.4bn gone. A political face-saving maneuver dressed as compassion? Maybe. Or maybe just common sense in a chaotic market.
Either way, the pumps don’t get cheaper overnight. We just stop getting hit as hard for a little while.
Until they change the tune again.
