The UK government has abandoned plans to raise fuel duty later this year, with Prime Minister Keir Starmer confirming that the temporary 5p cut introduced in 2022 will remain in place through the end of 2026. The move comes as petrol and diesel prices continue to rise following disruption linked to the conflict involving Iran.
Starmer announced the decision during Prime Minister’s Questions on Wednesday, describing it as part of a broader response to growing cost-of-living pressures affecting households and businesses across the country.
The government had previously intended to phase out the temporary reduction in stages beginning in September. According to The Guardian, Chancellor Rachel Reeves announced in the last Budget that fuel duty would remain frozen for nine months before gradually returning to previous levels.
The reversal follows a sharp increase in fuel prices after restrictions affecting tanker traffic through the Strait of Hormuz. According to The Independent, petrol prices at UK forecourts have risen by 26p per litre since the conflict began on February 28, while diesel prices have increased by 44p per litre.
Government Links Decision to Rising Costs Caused by Iran Conflict
Speaking in the Commons, Starmer said families across the United Kingdom were “facing impacts of a war that we did not choose”. He added that extending the fuel duty freeze was intended to shield drivers from further financial pressure as energy costs rise. “This is not our war, but while the parties opposite wanted to jump into it, Labour will always protect working people,” the Prime Minister told MPs.
According to a Treasury statement released during PMQs, the continued freeze means fuel duty will remain at nearly 53p per litre rather than increasing in phases later this year. Earlier plans would have introduced a 1p rise in September followed by two separate 2p increases in December and March.
The Treasury also said the average driver would save around £120 over two years as a result of the extended freeze.
Rachel Reeves said the government was acting after fuel prices were pushed upwards by events in Iran. “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,” she said, according to reporting by The Guardian.
The RAC warned this week that average petrol prices had already reached 158.5p per litre, the highest level recorded since December 2022. The organisation said wholesale market costs suggested prices could rise further in the coming weeks.
Hauliers Receive Tax Relief as Conservatives Accuse Labour of U-Turn
Alongside the fuel duty announcement, Starmer confirmed that haulage firms would receive a one-year vehicle excise duty holiday. According to the Treasury, heavy goods vehicle operators will pay £1 at annual renewal, producing savings of about £600 for a typical lorry and up to £912 for the largest vehicles.
Industry groups welcomed the intervention. Steve Gooding, director of the RAC Foundation, said ministers had recognised the “financial pain caused by rampant pump prices”.
He said drivers had already paid what he described as a “war premium” of £3 billion in higher fuel costs since the Iran conflict began, with around £500 million collected by the Treasury through VAT receipts.
Conservative leader Kemi Badenoch criticised the government’s shift in policy, describing it as a “U-turn” during exchanges in the Commons. She argued that Labour ministers had previously resisted calls to maintain the cut when questioned earlier in the year. Starmer rejected that accusation, insisting the decision was driven by recent developments linked to Iran and rising fuel costs rather than political pressure from the opposition.
