Lord Richard Walker, the cost of living advocate for Keir Starmer, has suggested that the government should think about extending or possibly increasing the 5p fuel duty reduction as tensions escalate in the Middle East.
The CEO of Iceland, Lord Walker’s input, adds to the mounting pressure on government officials to take action in light of escalating pump prices caused by the ongoing crisis in the region.
Although Chancellor Rachel Reeves prolonged the 5p per liter fuel duty reduction, initially implemented after Russia’s invasion of Ukraine in 2022, until August 2026 during last year’s Budget, it is set to expire in September and will be gradually phased out by March 2027.
Speaking on BBC Radio 4’s Today program, Lord Walker highlighted the importance of considering extending or expanding the current 5p fuel duty reduction given the circumstances. He referenced Australia’s recent 14p per liter fuel tax cut, emphasizing the disparity with the UK’s 5p reduction.
Lord Walker also acknowledged comments from Tory peer Lord Simon Wolfson, who urged the Treasury not to profit from the Iran conflict and to adjust fuel duty to alleviate immediate financial pressures on businesses and consumers.
In response, Next CEO Lord Wolfson noted that the government stands to gain increased tax revenue from soaring fuel prices and suggested maintaining a balance by reducing duty to keep tax revenues consistent. Labour peer Lord Walker echoed support for Lord Wolfson’s viewpoint.
Amid the escalating US-Israeli conflict with Tehran and the disruption in the Strait of Hormuz, a vital oil shipping route, both the Prime Minister and Chancellor have indicated a review of the situation. Rachel Reeves reassured that the government is preparing for all potential outcomes, focusing on securing oil and gas supplies to stabilize prices.
Reeves dismissed the notion of a “tax windfall” for the Treasury due to rising pump prices, emphasizing the government’s commitment to mitigating costs for consumers. Reports indicate a significant increase in tax revenue linked to oil and gas prices, but simultaneously, government borrowing costs have surged.
The Treasury emphasized its economic strategy to navigate the volatile global landscape and support working individuals responsibly. Fuel duty will remain frozen until September, with targeted assistance for those facing high heating oil expenses and measures to shield consumers from unfair price hikes and reduce food costs at the point of sale.
