An expert has told the Government it needs to take action as families are set to fork out more.
Andy Burnham has been told to act (Image: Getty)
The fuel industry is “laughing all the way to the bank” as UK drivers pick up the bill, and the Government is doing “nothing”, a motoring expert has raged. Howard Cox, founder of FairFuelUK, called the situation a “national disgrace”, adding that drivers want their “deepening national plight” highlighted. The expert said the Treasury is set for a VAT windfall as pump prices rise, hitting families, van drivers and hauliers ahead of John Healey’s October Budget.
In the week to September 7, UK average pump prices reached 164.4p/litre for petrol and 186.4p/litre for diesel. Brent crude closed at $103.98/bbl on 11 September, up around 9% week‑on‑week. Mr Cox said that, with fuel duty frozen at 52.95p/litre, volatility is concentrated in the wholesale and retail margin component, where both VAT receipts and supply‑chain profits rise when pump prices increase.
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Rising pump prices mean rising tax take, he added, and VAT is charged at 20% on the final pump price, meaning every penny increase in petrol or diesel automatically boosts Government revenue.
Drivers are ‘picking up the bill’, an expert has said (Image: Getty)
The typical fmaily car (8,000–10,000 miles/year, average fuel economy 40 mpg) sees an annual petrol use of around 900 to 1,100 litres.
The impact of petrol rising from 164p to 175p/litre would be an extra cost per litre of 11p, and an annual extra cost of between £100 and £120 per car, Mr Cox estimates.
For a two‑car household, this would be between £200 and £240 extra per year.
“Families are already stretched,” the specialist said.
“An extra £100–£120 a year just to get to work, school and the shops is not trivial — it’s another blow in a cost‑of‑living crisis.”
If petrol and diesel rise into FairFuelUK’s projected ranges, Mr Cox added, the Treasury stands to gain between £800million and £900 million in additional VAT revenue — without changing fuel duty.
Rod Dennis, RAC senior policy officer, said earlier this month: “The latest price rises throw into sharp focus just how exposed UK drivers can be to events thousands of miles away, and will likely increase calls for the Chancellor to demonstrate support for households already struggling with the rising cost of living.
“As things stand, fuel duty – which, together with tax, accounts for half of the cost of every litre of petrol we buy – is set to start rising from January but we believe there is a very strong case for leaving it at its current level, at least until the end of the Parliament.”
Mr Cox said: “The Treasury is set to gain nearly a billion pounds in extra VAT, the fuel supply chain could pocket another billion in margins, and ordinary drivers — from families to White Van Man to hauliers — are being hammered. The Government must act.”