Rachel Reeves 'plotting another huge tax hike' in blow to 37 million Brits

Rachel Reeves is set to declare war on motorists by unleashing a "huge" fuel tax hike in the Budget, it is claimed.

Experts say the tax-grabbing Chancellor is considering a raid on Britain's 37 million drivers to appease net zero supporters, using the parlous state of the public finances as cover.

The Daily Express was told her mooted pre-Christmas cash grab - which would end 15 years of forecourt fuel duty freezes - is being driven by Treasury pen pushers as a way of clawing back billions in lost pump price duty.

Howard Cox, founder of motoring lobby group FairFuelUK, said: "It's clear that because of the dire state of the national debt Labour supposedly inherited, but which they have since more than doubled, punitive tax rises are unavoidable in the Budget.

"The easiest target to impose under the false pretence of supporting their expensive net zero policies is, of course, fuel duty. I'm reliably told the Chancellor is looking at a huge rise."

Announcements of any fuel tax changes would come on November 26 when Ms Reeves unveils Labour's second Budget in 15 years.

But she was warned pulling the plug on successive duty freezes would see families and businesses fleeced at the forecourt just weeks before Christmas and torpedo any chances of growth.

The Express has been told a 10p increase is most likely. That would signal a reversal of former prime minister Rishi Sunak's 5p Covid cut, introduced amid global instability following Russia's invasion of Ukraine and which has been maintained in Budgets since. The deadline for its expiry is March.

A 10p rise would wipe that out plus saddle motorists with an additional 5p per litre in a move experts said would further impede economic growth.

The Treasury refused to be drawn on the claims.

Although pump prices vary hugely across the UK, the average price for unleaded petrol now stands at 134p per litre, while diesel is 142p.

If fuel duty is raised, filling up an average family car would cost an extra £6.60, a Transit van another £20, and a large HGV an additional £70.

FairFuelUK, which has successfully campaigned for duty freezes since 2011, has demanded it remains for the lifetime of this Parliament but now fears drivers will be the latest group to be clobbered by Labour's obsession with punitive tax raids.

Despite lower pump prices the UK's annual inflation rate, as measured by the Consumer Prices Index, currently stands at 3.8% - the highest rate since January 2024 and largely due to higher household energy bills, transport costs, airfares, and council tax.

But drivers in the UK face a double whammy at the pumps with fuel duty, a form of excise tax, levied at a flat rate of 52.95 pence per litre for both petrol and diesel. This rate has been frozen since 2011-12.

And in a further blow, VAT is charged on both the product price and the duty at a rate of 20%.

Mr Cox said: "The freeze on this regressive tax since 2011 means drivers have spent more of their disposable income, if any, in the economy, and businesses have remained solvent due to lower-than-expected transport costs.

"Every corner of our nation depends on road transport for construction, small trade contractors, food, clothing, internet deliveries, postal services, medical support, family cohesion, community interaction, and mental well-being.

"There are few avenues for further tax increases. This duplicitous and dishonest government has already targeted pensioners, farmers, private education, and small and medium size businesses, and remains clueless about how to deliver a concrete solution to the cost-of-living crisis."

Last year Ms Reeves said unfreezing fuel duty would be the "wrong choice" but those clamouring for her to do so say it would square with Labour's net zero ambitions.

Jack Cousens, head of roads policy at The AA, said: "An increase in fuel duty would hurt household budgets across the country. Not only would families feel the pinch when they fill up their cars, it would also hurt their shopping bills.

"Pretty much all goods and services arrive on a van or a truck, meaning if fuel duty goes up, then prices will too. We urge the Chancellor to think again before rising pump prices."

PumpWatch - an idea first proposed by FairFuelUK - would allow drivers to compare up-to-date forecourt prices in real time so they can hunt for the cheapest nearby.

But the scheme - now called Fuel Finder - is not yet operational meaning drivers remain at the mercy of a nationwide price lottery.

In June the Competition and Market Authority (CMA) found fuel margins - the difference between what a retailer pays for petrol and diesel and what it sells it at - were significantly higher than they should be, despite prices across the UK starting to tumble.

Dan Turnbull, senior director of markets at the CMA, said: "While there is uncertainty over how global events will impact the price of oil, fuel margins remain high compared to historic levels despite lower prices at the pump in recent months.

"The Government committed to launching a 'fuel finder' scheme following our recommendation to help drivers compare real time prices and boost competition. Once launched, it will make it easier than ever to shop around and find the best deals."

Simon Williams, head of policy at The RAC, said: "Drivers will be concerned to hear that retailer margins on fuel are still above where they have been historically and that competition remains weak.

"Given fuel is a major expense for households, and with eight-in-10 drivers dependent on their cars, it's disappointing to see they've paid over the odds yet again. We have to hope the launch of the government-backed Fuel Finder scheme, due at the end of the year, will stimulate competition and finally lead to fairer pump prices."

The Treasury said: "The Chancellor makes tax policy decisions at fiscal events. We do not comment on speculation around future changes to tax policy."

Due to the dire state of the national debt that Labour supposedly inherited, which they have since more than doubled, punitive tax rises are unavoidable in the unfairly scheduled Winter Budget.

The easiest targets to impose a needless hike on, under the false pretence of supporting their expensive, ill-informed net zero fantasy, are of course the UK's 37 million drivers.

I'm reliably told that the Chancellor is indeed considering a significant fuel duty increase just before Christmas.

Despite the average diesel fuel tax across Europe being 15p less, the lifeblood fuel of any economy's commercial sector here in the UK remains the most heavily taxed in the world.

Any increase in this regressive tax will not only harm the poorest the most but also undermine Rachel Reeves's much-voiced economic growth priorities by adding unnecessary costs and inflationary pressure on businesses of all sizes.

Thanks mainly to FairFuelUK, fuel duty has been frozen for over 14 years and still includes Rishi Sunak's Covid temporary 5p cut.

Some armchair experts who despise supporting drivers argue that restoring or unfreezing fuel duty could generate more than £3 billion a year. That's utter nonsense!

Had the fuel price escalator been strictly followed at every Budget since 2010, the UK would now be in a deep recession with pump prices potentially reaching £2.30 per litre.

Oddly, it is now rapidly approaching a recessionary situation due to Labour's economic mismanagement, even with the decade-and-a-half fuel duty freeze.

No other tax has such a significant impact on economic growth, inflation, employment, and business investment as the fuel duty rate at the pump. Every aspect of our society depends on the cost of road transport.

The Chancellor faces three potential fiscal options: cutting government spending, increasing the money supply through quantitative easing, raising taxes, or combining these strategies.

Each of these paths brings painful consequences for both drivers and the broader economy.

Cutting government expenditure could lead to reduced investment in the country's road infrastructure and transport services. Printing more money risks stoking inflation, which would push up fuel prices and the cost of essential goods.

Increasing taxes - particularly those on motoring - would impose a heavier financial strain on the millions reliant on their vehicles for daily life and work, and could also weaken consumer spending, business investment, and corporate profits, ultimately decreasing the government's tax income.

So Rachel, it's straightforward. To genuinely stabilise the economy, you need to put more money into people's and businesses' pockets.

The best way to do that is to cut fuel duty. That might upset Ed Miliband and the well-funded Greens, but the resulting growth in GDP and the extra disposable income for millions could give Labour a second chance.

Howard Cox is founder of FairFuelUK