Chancellor Jeremy Hunt has once again frozen fuel duty for 12 months - a move that has been a staple of Conservative governments since the start of the coalition.
'If I did nothing, Fuel Duty would increase by 13% this month. I have decided to maintain the 5p cut and freeze fuel duty for another 12 months,' the chancellor said.
'This will save the average car driver £50 next year and bring total savings since the 5p cut was introduced to £250 pounds.'
According to the Office for Budget Responsibility’s Policy Measures Database, extending the 5p cut in fuel duty for 2024/25 will cost £2.6bn, while extending the fuel duty freeze for 2024/25 will cost £1.6bn.
The latest Fuel Duty freeze means it will remain at 57.95p per litre - the level since March 2011.
The Campaign for Better Transport argued that the consecutive fuel duty freezes and cuts between 2011/12 and 2024/25 have cost HM Treasury 'a total of £133bn in foregone revenue and over the next four years (2025/26 to 2028/29) are due to cost another £77.5bn'.
Paul Tuohy CEO of CBT, said: 'By once again choosing to keep the 5p fuel duty cut and continue freezing fuel duty for another year, the Chancellor has committed to costing the Treasury a further £4.2bn in lost revenue.
Together this revenue would be enough to triple support for bus services across England and freeze rail fares for more than three years, positively impacting millions of public transport users and driving economic growth.
'Instead, the Government continues with retrograde measures that will do nothing to help those who have seen their bus services disappear, their rail fares rise and congestion blight their communities. It’s about time the Treasury reconsidered its priorities when it comes to transport.'
Paul Johnson, director of the Institute for Fiscal Studies, tweeted: 'Yet another fuel duty freeze. Yet no doubt we will continue the fiction that the "temporary" 5p cut will be reinstated and duty will rise with inflation from next year.
Not doing so will cost another £6bn on top of £14bn annual cost of freezes since 2010.'
The additional 5p cut had been in place since Spring 2022 and was meant to be temporary to help people with rising fuel prices. Since its introduction prices have come down.
Energy plans
Chancellor Hunt referenced the ongoing war in Ukraine as a continuing factor in energy costs and announced he will raise £1.5bn by extending windfall tax on energy companies.
Also in the energy and fuel sector, as part of the Budget announcements the Government has highlighted £73m in combined government and industry investment for cutting-edge automotive R&D projects to support the development of electric vehicle (EV) technology.
There is also almost £200m of joint government and industry funding going to aerospace R&D projects, supporting the development of energy-efficient and zero-carbon aircraft technology and accelerating the transition to net zero aviation.
This includes £40m for a project developing zero-carbon aircraft engine technology, led by Cambridge-based Marshall Group, and around £96m is being invested in projects led by Airbus, which focuses manufacturing in the UK.
The Chancellor also announced a further £120m increase to the Green Industries Growth Accelerator (GIGA) to support the expansion of low-carbon manufacturing supply chains across the UK, lowering costs and accelerating the transition.
The total fund has now increased to almost £1.1bn, split between the clean energy sectors, with around £390m earmarked to expand UK-based supply chains for electricity networks and offshore wind sectors, and around £390m for carbon capture, utilisation and storage and hydrogen sectors.
The remaining £300m has been previously announced for UK production of the fuel required to power high-tech new nuclear reactors, known as HALEU.
