Starmer extends fuel duty freeze and introduces haulage tax break
Treasury estimates average driver will save £120 over two years as government reverses planned September end to temporary cut
Prime Minister Keir Starmer has announced the extension of the temporary 5p cut in fuel duty for the remainder of 2026, alongside a 12-month vehicle excise duty holiday for the haulage industry. The measures were unveiled during Prime Minister’s Questions, with Starmer describing the extension as a necessary response to cost-of-living pressures and rising fuel prices linked to the conflict in Iran.
The decision marks a reversal of the plan set out at the last budget, where Chancellor Rachel Reeves had announced a nine-month freeze on fuel duty with the temporary 5p cut scheduled to end in September. The original 5p cut was introduced by former Prime Minister Rishi Sunak in 2022 following Russia’s full-scale invasion of Ukraine. Starmer rejected Conservative leader Kemi Badenoch’s claim that the policy shift was a U-turn resulting from her pressure, attributing the move solely to the situation in Iran.
Starmer told the Commons that the intervention was made possible by strong economic growth at the beginning of the year, which he noted had made the UK the fastest-growing economy in the G7. He emphasised that while the conflict in Iran was not the UK’s war, the government had a duty to protect working people from the resulting price increases.
Chancellor Rachel Reeves stated that the government was stepping in to protect households and businesses at the pump. In Treasury statements released alongside the announcement, Reeves said the measures were part of a broader economic plan to build a stronger and more secure economy for Britain. Further details on additional measures are expected to be outlined by Reeves on Thursday.
The Treasury calculated that the fuel duty freeze would save the average driver £120 over two years, while the haulage tax break would save £600 for a typical heavy lorry. The announcement comes as the UK government recently issued a trade licence permitting the indefinite import of jet fuel and diesel refined from Russian crude oil in third countries, a move driven by surging domestic costs and supply disruptions linked to the de facto blockade of the Strait of Hormuz.