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Jeremy Hunt refuses to rule out massive UK fuel duty hike next year

fuel duty Chancellor of the Exchequer Jeremy Hunt giving evidence before the Treasury Committee at the House of Commons, in London. Picture date: Wednesday March 29, 2023.
Chancellor Jeremy Hunt told the Treasury Committee he hasn't ruled out a hike in fuel duty for next year. Photo: PA/Alamy (House of Commons/UK Parliament, PA Images)

Jeremy Hunt has not ruled out a big hike to fuel duty next year as the chancellor stressed that Treasury “cannot afford to make that change permanent."

The chancellor was giving evidence to the Treasury Select Committee and was asked about his decision to freeze fuel duty at the Budget this year and to keep in place a 5p cut to the duty for another 12 months.

"We'll make a decision at the next budget and it will be decided on the basis of the room we have in our fiscal forecast," Hunt said.

"At the moment, we do not have the headroom to do that. So that's why we are not planning to do it.

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"But of course, we will look at what the numbers say close to the next Budget and keep that decision under review."

Harriett Baldwin, the chair of the committee, said that the fiscal forecast currently assumes that fuel duty will increase by double digits next year. Baldwin said she was "very sceptical" such a move would be made in an election year.

Read more: Budget 2023: Hunt scraps life-time pension allowance as he says UK will avoid recession

Asked again if there could be a double digit increase to fuel duty next year, the chancellor said: “We don't know. We haven't made any decisions. I don't agree that it's a fiction [that we will put up fuel duty].

“The cost of making it a permanent change would be a £4bn reduction in the headroom after four years. The headroom is only £6.5bn.

“We cannot afford to make that change permanent. It has just not been an option.

“Did I want to do it this year? Yes I did because inflation is running above 10%”.

Hunt also said there were mistakes in the Liz Truss mini-Budget he had to reverse.

“Yes, there were some mistakes in the mini-Budget which we had to reverse and in particular I think it is clear you can't fund tax cuts through increased borrowing.

Read more: Petrol pumps not passing cut in wholesale diesel prices to motorists

"That is a clear thing that we changed course on."

The chancellor also admitted that the tax burden is now at a 70-year high.

He told the Treasury Select Committee that he wants "to bring it down".

"As a proportion of GDP I accept that following a once in a century global pandemic and a once in a generation energy crisis... yes, I accept the tax burden has gone up for the moment," he said.

"But I want to bring it down and that is why the focus in the Budget was unlocking our long term economic growth rate through addressing labour supply and business investment."

Watch: Jeremy Hunt backs inflation battle and says UK is financially stable

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