Fuel duty has been frozen for the tenth year in a row, the Chancellor has confirmed.
Rishi Sunak announced in today’s Budget statement that the taxation on petrol and diesel will remain at 57.95p per litre, as it has since March 2011.
He told the Commons: ‘I have heard representations that after nine years of being frozen, at a cost of £110billion to the taxpayer, we can no longer afford to freeze fuel duty,’ though conceded that it would remain unchanged because motorists are still heavily reliant on their cars.
The Budget document has also confirmed that the Plug-In Car Grant, subsidising the purchase price of a new electric car, has been extended to 2023. However, the value of the grant has been reduced by £500 to £3,500 and buyers of EVs costing more than £50,000 won’t receive the grant at all.
Freeze continues: Fuel duty has been frozen for the tenth year in a row, meaning drivers will continue to pay 58.95p in tax on every litre of petrol and diesel pumped into cars for the next year
‘I’m certainly mindful of the fiscal cost and the environmental impacts,’ the Chancellor said.
‘But I’m taking considerable steps in this Budget to incentivise cleaner forms of transportation, and many people still rely on their cars.
‘So I’m pleased to announce today that for another year fuel duty will remain frozen.
‘Compared to 2010 plans, that’s a saving of £1,200.’
Fears had grown that Mr Sunak would end the freeze to bolster the Treasury’s coffers and push more drivers in the direction of greener electric vehicles.
Environmental groups had heaped pressure on the Chancellor to increase fuel duty to show the Government was serious about tackling climate change.
AA president Edmund King said the motoring group was pleased the Chancellor had listened to his calls to maintain the freeze in fuel duty, as an increase would have had a negative impact on both households and business at a time when ‘the economy is fragile given the current circumstances’.
Nicholas Lyes, head of policy at RAC, said the decision was welcomed and will be a ‘relief to drivers up and down the country’.
He added: ‘While the Chancellor might have been tempted to increase duty, the reality is that for millions this would have simply increased their everyday driving costs and done nothing to encourage them to switch to cleaner vehicles.
‘And while many want to seek alternative transport options to using their vehicles for some journeys, in so many parts of the country reasonable public transport provision simply does not exist.’
Steve Gooding, director of motoring research charity RAC Foundation, said: ‘The Chancellor clearly recognised that the coronavirus is creating unprecedented health and economic uncertainties, and that because transport is the single biggest area of household expenditure, any move to increase this burden would hit drivers’ wallets hard, especially those on lower incomes.’
Drivers do not want to be seen just as environmental pariahs and perennial easy cash cows
Howard Cox, FairFuelUK Campaign founder
Howard Cox, who has campaigned for the fuel duty freeze to be retained said the ‘rookie Chancellor’ had listened to common sense.
The founder of FairFuel UK added: ‘This Government must recognise that drivers do not want to be seen just as environmental pariahs and perennial easy cash cows.
‘We must put money back into consumer spending, free up roads congestion and incentivise drivers to move to cleaner fuels and practical solutions to help lower emissions, without the threat of ineffective vehicle bans and regressive pay to pollute taxes.
‘Any thought of future tax increases on hard pressed motorists, will result in a Drivers Rebellion. Well done Chancellor, that for the moment is postponed.’
The cost implication to the Treasury of freezing fuel duty for a tenth year in a row could be recovered through the end of a tax relief on red diesel also announced in today’s Budget.
The Chancellor said in two year’s time the lower 11p tax on the fuel would be removed for all but the rail, home heating and agricultural sectors.
This would mean an extra £5billion for the Treasury between 2022 and 2025.
The government also confirmed it will continue to uprate VED rates for cars, vans and motorcycles in line with RPI, with the next increase coming on 1 April 2020.
However, there is a call for evidence to scrap a flat ‘standard’ rate of VED for new cars from the second year and return to an escalating cost system based on how much CO2 a vehicle emits.
The Treasury said this would ‘incentivise lower-emission car purchases’.
SAVE MONEY ON MOTORING
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