Fuel Duty Rise Cancelled by Chancellor

A rise in fuel duty scheduled for introduction in September has been cancelled, Chancellor George Osborne said in his Budget speech.

Petrol would now be 13 pence per litre cheaper than it would have been had the duty not been frozen over the last two years.  He said, “for a Vauxhall Astra or a Ford Focus, that’s £7 less every time you fill up.”

Fuel duty has not gone up since January 2011, when it was raised by 0.76p per litre.  It was then cut by 1p in March 2011 and, ever since, planned increases have been postponed repeatedly.

“We’ve now frozen fuel duty for two years,” Mr Osborne said. “This has not been easy. The government has foregone £6bn in revenues to date.”

Fuel duty has risen from 45.82p per litre in March 2001 to the current 57.95p per litre.  Hence, about 42% of the pump price ends up in the government coffers as duty. This rises to 59% once value added tax (VAT) has been added, according to the RAC Foundation.

As such, petrol and diesel are amongst the main drivers of overall transport costs, according to the Office for National Statistics.