Fuel duty, frozen for over a decade, faces uncertainty under the prospective leadership of Andy Burnham as Prime Minister. The current Labour Chancellor, Rachel Reeves, pledged to keep the freeze intact until the end of this year. However, experts warn that unfreezing and adjusting fuel duty in line with inflation could add between £60 and £100 annually to household petrol and diesel expenses.
Nimesh Shah from Blick Rothenburg explains that reintroducing fuel duty hikes could generate an additional £6-7 million in revenue for a Labour government under Burnham’s leadership. This comes after Ms. Reeves announced a nine-month freeze at the last budget but planned to end a temporary 5p per litre cut starting September. This cut was originally introduced by former Conservative Prime Minister Rishi Sunak in 2022 as part of measures responding to rising prices following Russia’s invasion of Ukraine.
Pressure has mounted for Labour to extend the 5p duty reduction, which currently costs the government an estimated £2.4 billion annually. Richard Walker, Iceland’s executive chair and the government’s cost of living champion, recently advocated on BBC Radio 4’s Today programme for considering an extension or expansion of this fuel duty cut given the ongoing cost pressures.
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Rachel Reeves acknowledged the impact of geopolitical tensions, stating, “The war in Iran is pushing up fuel prices here at home, but after strong growth at the beginning of the year, I am stepping in to protect people at the pump.”
The Home Office reports that the fuel duty freeze has already saved the average driver approximately £120 since 2025. Still, this relief is temporary, and changes could come into effect soon.
Prime Minister Keir Starmer emphasized the government’s commitment to shielding working families, saying, “I know many are feeling the pressure of energy and fuel costs, and are worried about how the conflict in Iran will affect their finances. Because when global events drive up prices, it’s working people who feel it first. That’s why this government is stepping in to keep fuel costs down for millions of drivers and putting money back in the pockets of working people.”