Yahoo Finance Jeremy Hunt freezes fuel duty again in budget
Jeremy Hunt has extended the 5p cut in fuel duty for another year at a cost of £5bn, making it the 14th year in a row that it remains frozen.
The 5p per litre cut was set to run out in March 2024 and if it were not extended, fuel duty would be set to return to its frozen rate of 57.95p per litre.
Read more: 5 things on Jeremy Hunt’s 'budget list' that could impact your finances
"[The fuel duty cut] will save the average car driver £50 next year and bring total savings since the 5p cut was introduced to around £250," Hunt said.
It comes as new data from the RAC showed that average price of petrol rose by 4p a litre in February while diesel shot up by nearly 5p.
RAC head of policy Simon Williams said: “With a general election looming, it would have been a huge surprise for the Chancellor to tamper with the political hot potato that is fuel duty in today’s Budget.
“It appears the decision of if or when duty will be put back up again has been quietly passed to the next government.
“But, while it’s good news that fuel duty has been kept low, it’s unlikely drivers will be breathing a collective sigh of relief as we don’t believe they’ve fully benefited from the cut that was introduced just two years ago due to retailers upping margins to cover their ‘increased costs’.
However, the government only met its fiscal rules at the last autumn statement because the Office for Budget Responsibility (OBR) assumed that fuel duty would increase in this year’s budget.
The OBR warned last autumn that freezing fuel duty would wipe out 43% of the chancellor’s “headroom” in 2028-29 and would mean the national debt would no longer be falling.
Read more: Tax on vapes and tobacco to ramp up as alcohol duty frozen in budget
Hunt signalled that he wants to move towards a “lower tax economy” in a hint at a pre-election giveaway to voters in the form of a national insurance or income tax cut.
Greg Hands, a trade minister, said the public deserve a “bit of a tax break this year”.
Hands told Sky News: “I think a responsible budget would be making sure the country, the economy continues to recover from the pandemic, from Putin’s illegal invasion of Ukraine, the spike in inflation that we have had to deal with.
Watch: Hunt: Fuel duty freeze extended for 12 months
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