Concern over high fuel prices prompts RAC call for fuel duty or VAT cut

Concern over high fuel prices prompts RAC call for fuel duty or VAT cut

With just hours to go until the Chancellor’s Spring Statement, eight in 10 drivers (83%) want him to step in to help reduce the impact of record-high pump prices with a cut in duty or a reduction in VAT levied on fuel, new RAC research conducted among 2,000 drivers shows.

The study shows that drivers are increasingly worried about the impact of high prices with averages hitting new records most days over the last few weeks and now standing at around 167p per litre for petrol and nearly 179p for diesel.

Seven in 10 drivers said they are ‘very concerned’ about how high pump prices are, up from 51% who said the same late last October when average prices were 25p and 33p per litre lower for petrol and diesel respectively (142p and 146p). Of those surveyed over the last few days, more than nine in 10 (94%) said they are dependent on their vehicles, with 79% of these stating they are ‘very dependent’.

The effect record fuel prices are having on drivers is also clear from the research with a quarter (25%) saying they are being forced to cut spending on other things to afford to pay for essential fuel with another 41% saying they’ll have to do this if prices go up any further.

Separately, four in 10 (41%) say they are already driving less while 25% say they’ll be forced to if prices go up further, while 36% are deliberately cutting out leisure and recreational car journeys as a result of the high prices with a similar proportion (35%) saying they’ll do so if prices keep rising.

Calculations by the RAC show that a 5p cut in fuel duty – taking it from 57.95p per litre down to 52.95p – would shave around £3off the cost of filling a 55-litre family car, or nearly £7 if the Chancellor went further and reduced duty by 10p to 47.95p. A 5% cut to VAT meanwhile – bringing the rate down to 15% from the current 20% -– would see almost £4 taken off the cost of filling a family car with petrol and more than £4 off one that runs on diesel.

RAC head of policy Nicholas Lyes said: “As the cost-of-living crisis really starts to bite, there is now enormous pressure on the Chancellor to act today to help drivers – the majority of whom we know depend on their vehicles day in, day out. The fact the Treasury has enjoyed something of a VAT windfall in recent months with pump prices as high as they are surely gives Mr Sunak the fiscal means of intervening to assist households, many of which will be struggling right now.

“Despite rumours of a cut to fuel duty now in wide circulation, our analysis shows that in many ways a cut in VAT would benefit drivers more – and be fairer on those who run diesel vehicles and are paying a significant premium for the fuel right now, with the cost of filling a family-sized car almost at the £100 mark for the first time.

“A temporary 5% cut in VAT to 15% would see around £3.80 come off the cost of filling a family car with petrol, and £4.10 off one that runs on diesel. What’s more, a cut to VAT would help reduce the impact of future pump price rises – something a fuel duty cut doesn’t achieve.

“Whatever the Chancellor may have up his sleeve today, the sheer strength of feeling among drivers and businesses for him to act is clear. Doing nothing and forcing millions who depend on their vehicles to cut their spending in other areas simply to keep them running doesn’t appear to be an option.”


What a cut to fuel duty or VAT on fuel could do to pump prices

Petrol Diesel
Current average – ppl 167.03 178.97
55-litre tank cost £91.87  £98.43
5p fuel duty cut to 52.95p
New average pump price – ppl 161.03 172.97
Saving – ppl 6.00 6.00
55-litre tank cost £88.57  £95.13
Tank saving £3.30  £3.30
5% VAT cut to 15%
New average pump price – ppl 160.07 171.51
Saving – ppl 6.96 7.46
55-litre tank cost £88.04  £94.33
Tank saving £3.83  £4.10