The RAC has called for an end to the 5p fuel duty cut introduced in 2022. The organisation claims it costs the Treasury £2 billion annually without benefiting drivers, accusing fuel retailers of pocketing the savings.
The suggestion comes amid claims of record-high profit margins for fuel retailers. Drivers are reportedly overcharged, despite the relief measures intended to reduce their financial burdens on fuel.
Introduced in 2022 to alleviate the cost of living crisis, the fuel duty cut is costing the Treasury £2 billion per year. However, motorists do not seem to be reaping the benefits at the pumps. The criticism is directed towards fuel retailers who are allegedly enjoying record-high profit margins of 13p per litre on unleaded and 15p on diesel, compared to pre-pandemic margins of 8p.
This 5p cut was introduced by then-Chancellor Rishi Sunak in response to soaring fuel prices following Russia’s invasion of Ukraine. It was designed to save motorists 6p per litre once VAT was included. However, sharp increases in the wholesale price of oil quickly nullified these savings.
Williams argues that the chancellor should reconsider the cut in the upcoming October budget. He highlights that the 5p reduction is costing the government billions, while drivers continue to be overcharged.
Retailers are encouraged to drop average petrol prices from 142p per litre to 136p, and diesel from 147p to 139p. However, claims from the Petrol Retailers’ Association dispute these figures.
Luke Bosdet of the AA criticised motorway service areas for persistently high charges. “Pump prices at motorway service areas continue the tradition of being almost completely uncompetitive,” he remarked.
However, it remains uncertain whether the scheme will trigger significant changes at motorway service areas.
As the debate continues, the RAC’s call to scrap the fuel duty cut puts pressure on the government. It is essential to reassess the measure’s effectiveness amid growing frustration about the failure to deliver savings to drivers.
The RAC’s recommendation to scrap the 5p fuel duty cut reflects ongoing concerns about its ineffectiveness. With high retail profit margins and inflated costs for drivers, the intent behind the relief measure has clearly missed its mark.
As the government considers this call to action, the focus should be on ensuring that any fiscal measures genuinely benefit motorists, ensuring fair pricing at the pumps.
