Pressure is mounting on Chancellor John Healey to cut Fuel Duty in the October Budget, with some arguing the move would ease the burden on motorists. AA President Edmund King called on the Chancellor to restrain rising fuel costs at the pump, as the motoring organisation's leader pointed to Labour's anticipated increase in Fuel Duty early in the new year.

The appeal covered two distinct asks: keeping the existing 5p-per-litre Fuel Duty relief — a measure the Conservatives had put in place and one due to lapse on 1 January — while also bringing the levy down by an additional 5p, with Mr Healey named as the minister who should act. Factoring in VAT, each of the two proposals would trim the cost of petrol by 12p per litre, cutting roughly £6.60 from a typical family car fill-up.

Forecourt diesel prices crossed the £2-per-litre threshold this month, reaching a level not previously recorded. Petrol prices at a number of filling stations climbed to £2.20 per litre during the past several weeks.

Data gathered by the AA from the Government's Fuel Finder tool showed that, when October opened, roughly 2,500 of the country's approximately 8,000 filling stations had set their diesel price at £2 a litre or above.

Those who advocate for a reduction in fuel duty argue that elevated costs at the forecourt feed through into broader price pressures, with haulage operators — reliant on diesel to move freight — passing the additional expense along the supply chain to retailers and consumers. Fuel costs at the pump climbed after hostilities between Iran and another party broke out on 28 February.

King added his voice to calls that had built over the preceding weeks for a reduction in Fuel Duty, arguing that the Chancellor needed to act to ease the burden of climbing fuel prices on drivers. Retaining the existing 5p Fuel Duty reduction has been put forward as a necessary starting point, with some arguing that the Chancellor ought to go further and reduce the rate by an additional 5p given the upward pressure on prices.

Rising fuel costs carry consequences well beyond the roads, touching households, businesses, and supply chains alike. When freight costs climb, the expense of transporting goods, fulfilling orders, and operating a business rises in step — and those added burdens tend to filter through, eventually landing on household budgets.

Higher fuel costs at the pump feed a corresponding uplift in VAT receipts flowing to the Treasury. RAC Foundation data put the additional cost to motorists at the pumps at £9.2 billion in the period from 28 February, a figure the organisation said the Chancellor ought to factor into any Budget decisions offering relief to drivers and businesses.

The elevated pump prices that followed have translated into an estimated £1.5 billion in additional VAT receipts for the Treasury, given that the 20 per cent levy scales in proportion to the cost at the forecourt.

Fuel Duty is pencilled in to climb by 3p per litre on 1 January, with a further 2p added from 1 March, both increases landing in a period when household energy bills are themselves set to rise following an upward adjustment to Ofgem's price cap. Plans at the Treasury point to a 1p uplift on Fuel Duty coming in April of next year, bringing a 16-year period without any increase to a close. A VAT charge of 1.2p per litre would be applied on top of that. Taken together, that 7.2p rise in duty would push the price of a full tank for an average family car up by roughly £4.

No formal determination on Fuel Duty rates has yet been reached, Treasury insiders have indicated. Retaining the 5p-per-litre discount on fuel — introduced in 2022 as pump prices rose in the wake of Russia's military offensive in Ukraine — would reduce Treasury income by roughly £2.4 billion each year.

RAC data put the average pump price for diesel across the UK at 199.90p per litre when Friday's figures were recorded, a modest retreat from the levels seen earlier in the week. The average price of a litre of petrol stood at 174.79p. Tax decisions remain the Chancellor's to announce at fiscal events, a Treasury spokesman indicated, with the department not in the habit of addressing rumour, speculation, or proposals in the interim.