Rates were previously planned to increase from September.
Pumps at a petrol station (Image: Peter Byrne/PA)
An increase in fuel duty planned for September has been scrapped. Prime Minister Sir Keir Starmer told MPs the 5p per litre fuel duty cut introduced by the Conservative government in March 2022 would be extended for the rest of the year.
Rates were previously planned to increase from September, gradually returning to previous levels over the next five years.
Iran’s restrictions on tankers passing through the Strait of Hormuz means the average price of a litre of petrol and diesel at UK forecourts is 26p and 44p respectively more expensive than before the conflict started on February 28.
Steve Gooding, director of motoring research charity the RAC Foundation, said: “Although today’s news on fuel duty won’t have the immediate effect of bringing forecourt prices down, at least it shows that ministers have registered the financial pain caused by rampant pump prices for individuals and for business.
“Since the start of the Iran conflict drivers have already paid a war premium of a staggering £3 billion in inflated fuel prices, half a billion of which has gone to the Exchequer in VAT receipts.”
The Prime Minister said: “Families across the United Kingdom are facing impacts of a war that we did not choose. This is not our war, but while the parties opposite wanted to jump into it, Labour will always protect working people.”
The Government previously announced better protection from energy crises as they tee up a new long-term fixed-price contract for renewables, and immediate action to tax excess profits through the Electricity Generator Levy, raising the rate from 45% to 55% and extending its duration.
Prime Minister Keir Starmer said: “We need to get off the fossil fuel rollercoaster – this will make energy bills more stable and take the pressure off family budgets. When global gas prices spike, people here shouldn’t be picking up the tab.
“Our focus is simple: easing pressure on household budgets now, while building a homegrown energy system that protects families from global instability in the years ahead.”
Keir Starmer said Labour would ‘protect working people’ from energy crises (file) (Image: Getty)
The Government said that instability in the Middle East has shown that Britain’s reliance on international fossil fuel markets leaves families and businesses exposed to volatile gas prices.
To shield families from future crises, it is setting out new measures to ‘break the link’ and reduce the impact that volatile gas prices have on the price of electricity.
Energy Secretary Ed Miliband said: “As we face the second fossil fuel shock in less than 5 years, the lesson for our country is clear: The era of fossil fuel security is over, and the era of clean energy security must come of age. That’s why we’re doubling down on clean power, to give our country energy security and bring down bills for good.”