By Jason Groves
Published: 08:23 AEDT, 18 October 2024 | Updated: 18:09 AEDT, 18 October 2024
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Fuel duty is set to rise by up to 7p a litre as Rachel Reeves scrambles for cash in this month's Budget.
Whitehall sources say the Chancellor will not renew a 'temporary' 5p cut in fuel duty, which is due to end in March next year.
She is also considering restoring the annual fuel duty rise after Treasury officials warned her that she has a 'now or never' opportunity to end a freeze that has lasted for 14 years.
This would add another 1p or 2p to the duty levied at the pumps, with VAT adding another penny to the price paid by motorists.
A 7p rise in fuel duty would add £3.85 to the cost of filling up an average family car – undermining Labour's claim that it will not impose higher taxes on working people.
Rachel Reeves will not renew a 'temporary' 5p fuel duty cut set to end next March, sources say
Successive Conservative chancellors blocked a planned inflation-level fuel increase following pressure from MPs, but Ms Reeves is considering restoring the rise (file photo)
But ministers believe that, with pump prices at their lowest since Russia's invasion of Ukraine, they can justify a fresh tax raid. Fuel duty is currently 52.95p per litre.
Insiders say the Treasury has modelled raising fuel duty by as much as 15p a litre. However, Ms Reeves is expected to back away from an increase on this scale amid fears of a backlash from motorists and business.
A Treasury spokesman said: 'We do not comment on speculation around tax changes outside of fiscal events.'
Meanwhile, in the Lords, government minister Baroness Blake ducked questions about whether the Treasury is drawing up plans to introduce road pricing to fill a projected shortfall in revenue as people switch to electric vehicles.
Tory peers warned that any move to introduce per-mile pricing would slow the take-up of electric vehicles.
She said: 'I cannot comment on any matter that might be raised in the Budget.'
Published by Associated Newspapers Ltd
Part of the Daily Mail, The Mail on Sunday & Metro Media Group