Starmer’s cost-of-living adviser calls for fuel duty cut extension
Starmer’s cost-of-living adviser calls for fuel duty cut extension
Labour’s cost-of-living expert has urged the government to maintain the 5p fuel tax reduction beyond September, following a surge in petrol prices linked to the US and Israel’s conflict with Iran. The decision, initially set to expire after four years, has drawn attention from Lord Walker, a Labour peer and head of Iceland supermarkets, who emphasized the need to reconsider the policy.
“I think given where we are, we do need to be thinking and talking about extending it or enlarging it,” Lord Walker stated during an interview with BBC Radio 4’s Today programme.
The temporary tax cut was introduced by the former Conservative administration in response to soaring energy costs after Russia’s invasion of Ukraine in 2022. Recent volatility in oil prices has intensified calls for its continuation, as Iran’s actions in the Strait of Hormuz disrupted global energy supplies.
Lord Walker highlighted Australia’s recent move to reduce fuel taxes by 14p per litre, suggesting similar measures could benefit the UK. He argued that lowering the rate might ease financial pressure on households and businesses amid the ongoing crisis.
Meanwhile, nations across the globe are adopting varied strategies to tackle the energy crisis. Ireland has lowered petrol and diesel taxes, while Slovenia became the first EU member to implement fuel rationing. In Egypt, businesses are being asked to reduce energy consumption by closing early.
Sir Keir Starmer acknowledged the challenges of addressing the Iran war’s economic impact, stating it would “not be easy.” The Labour government has already provided additional funding for heating oil users and introduced an energy cap effective 1 April. However, projections indicate a sharp increase in bills by July due to rising oil prices.
A Treasury representative defended the current approach, asserting, “We have the right economic plan for a more volatile world, taking a responsible approach to supporting working people in the national interest. Fuel duty is frozen until September, and we’re enabling targeted support for those facing higher heating oil costs.”
Political factions are divided on the issue. The Conservatives, Reform UK, and the Liberal Democrats advocate for the tax cut to remain in effect past September. Kemi Badenoch, Conservative leader, predicted a “humiliating U-turn” for Sir Keir if the cut is reversed. Sir Ed Davey of the Liberal Democrats called for an immediate 10p reduction, while Reform’s Robert Jenrick proposed halving petrol VAT for three months.
Other parties, such as the Greens, have urged preparations for potential energy bill hikes of up to £300 per household. The SNP pushed for Scottish energy policy to be managed by Holyrood, and Plaid Cymru emphasized the importance of investing in renewable energy to shield citizens from future price spikes.
