Petrol and diesel drivers being handed free £130 from today under Labour

Drivers will be handed a £130 boost from today - after a surprise in the Labour Party Budget. In the Budget, one surprise move was the chancellor’s announcement that a temporary 5p cut in fuel duty would remain in place for motorists.

“While the cost of living remains high and with a backdrop of global uncertainty, increasing fuel duty next year would be the wrong choice for working people”, Reeves said. The current fuel duty rate for petrol and diesel, which includes the 5p cut, is 52.95p a litre.

The cut is saving drivers about £130 a year according to the price comparison site Confused.com. The RAC has welcomed the news. Simon Williams, RAC head of policy, said drivers would “breathe an enormous sigh of relief” given the previous speculation about the 5p cut being scrapped.

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Fuel duty is a tax included in the price we pay for petrol and diesel. Since March 2011, it’s been frozen at 57.95p a litre. Oil prices spikes in 2022 after the Russia-Ukraine conflict, leading to a temporary 5p cut in the levy. Jeremy Hunt extended this cut in March, keeping fuel prices below the frozen rate.

The RAC estimates that the 5p discount costs the Treasury around £2bn every year. Ms Reeves said: “To retain the 5p cut and to freeze fuel duty again would cost over £3 billion next year. At a time when the fiscal position is so difficult, I have to be frank with the House that this is a substantial commitment to make.

“I have concluded that in these difficult circumstances – while the cost of living remains high and with a backdrop of global uncertainty – increasing fuel duty next year would be the wrong choice for working people. It would mean fuel duty rising by 7p per litre. So, I have today decided to freeze fuel duty next year and I will maintain the existing 5p cut for another year, too.

“There will be no higher taxes at the petrol pumps next year.”