Keir Starmer’s appointed advocate for addressing the rising cost of living has suggested that the government should explore the possibility of extending or increasing the current 5p fuel duty reduction amidst escalating tensions in the Middle East.
Lord Richard Walker, the CEO of Iceland, has added to the mounting pressure on government officials to take action in light of the soaring pump prices attributed to the ongoing crisis in the region.
While Chancellor Rachel Reeves had previously prolonged the 5p per liter fuel duty cut, initially implemented following Russia’s invasion of Ukraine in 2022, until August 2026, the relief measure is set to expire in September and gradually phased out by March 2027.
Speaking on BBC Radio 4’s Today program, Lord Walker emphasized the importance of reconsidering the fuel duty cut extension or expansion given the current circumstances. He pointed out the recent decision by the Australian government to reduce fuel tax by 14p per liter, highlighting the potential impact of such adjustments.
Lord Walker also responded to comments made by Tory peer Lord Simon Wolfson, who urged the Treasury not to profit from the conflict in Iran and proposed adjusting fuel duty to alleviate immediate financial pressures on businesses and consumers.
In light of the escalating tensions in the US-Israeli conflict with Tehran and the disruption of the vital oil shipping route through the Strait of Hormuz, the Prime Minister and Chancellor have assured that the situation is closely monitored. Rachel Reeves reiterated the government’s readiness to address all potential outcomes and ensure stability in energy supplies and prices.
Dismissing any notion of a tax windfall resulting from the surge in pump prices as unrealistic, Reeves emphasized the government’s focus on supporting the public amid economic challenges. The government has been reported to be benefiting from increased tax revenues linked to oil and gas prices but faces rising costs of government borrowing.
In response to these developments, the Treasury has reiterated its commitment to an economic strategy tailored to the current volatile global environment, emphasizing support for working individuals and targeted assistance for those facing higher heating oil expenses. The freeze on fuel duty until September, alongside measures to shield consumers from unfair price hikes and reduce food costs, reflects the government’s efforts to navigate the economic challenges effectively.
