The Government has delayed planned fuel duty rises after soaring petrol prices increased pressure on motorists and businesses.
Prime Minister Keir Starmer said the Government was “stepping in to keep fuel costs down for millions of drivers and putting money back in the pockets of working people”.
Chancellor Rachel Reeves added: “The war in Iran is pushing up fuel prices here at home but after strong growth at the beginning of the year, I am stepping in to protect people at the pump.”
The move follows growing concern over rising forecourt prices, with average petrol prices reaching 158.52p per litre on May 18, according to the RAC.
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Close Brothers Motor Finance said the decision would provide some relief for drivers already facing rising motoring costs.
John Cassidy, managing director at Close Brothers Motor Finance, said: “The Government’s decision to postpone the fuel duty rise will provide some respite to motorists.
“Events in the Middle East means drivers have been feeling the pinch at the pumps at a time when the cost of motoring continues to soar, putting strain on household finances.
“With 42% of motorists stating that they have been worried about further petrol price rises, the announcement should go some way to alleviating financial stress.”
Raising fuel prices causing anxiety for motorists
Research from Close Brothers Motor Finance found that 81% of motorists want additional Government support, while 20% said rising fuel prices had caused stress or anxiety.
The knock-on impact of rising fuel prices is pushing some customers to consider switching to EV.
Under plans announced in the Autumn Budget, fuel duty had been due to increase by 1p per litre from September 1, 2026, followed by two further 2p rises in December 2026 and March 2027.
However, mounting political pressure and concerns over the impact on households led ministers to delay the increases.
The Treasury also confirmed a 12-month vehicle excise duty holiday for hauliers, with operators paying £1 at renewal, saving up to £912 for the largest heavy goods vehicles.
Questions remain over how and when the delayed 5p fuel duty increase will now be introduced, with no detailed timeline yet provided by Government.
There is also no confirmation on whether the VED holiday will apply only to HGV operators or whether van fleets could also benefit.
What happens next year?
The AA head of roads policy Jack Cousens said motorists may not know until the autumn how the delayed increases will eventually return.
He said: “This also gives an opportunity for the Government’s Fuel Finder scheme to show its value, by showing drivers where to find the best prices.”
Simon Williams, head of policy at the RAC, added: “Drivers are struggling with the cost of filling up, especially now petrol has reached an Iran War high of 158.73p a litre, so the decision to keep the 5p fuel duty in place for the time being is very welcome.
“The Prime Minister’s announcement that duty won’t go up this year means a penny won’t go back on in September, followed by a further 2p in December.
“The big question is now: what will happen next year, and will drivers be hit with the full 5p in one go in the spring, will a new phasing be agreed, or will the Government even abandon an increase altogether?”
Nick Connor, chief executive of Institute of the Motor Industry, said: “We welcome the Government’s decision to scrap the planned fuel duty increase. With pump prices already at their highest level in years due to the conflict in Iran, any additional burden on motorists and the businesses that depend on the road network would have been extremely damaging.
“The motor industry is on the front line of this cost pressure. Our members see every day the financial strain that rising fuel costs place on their own business operations as well as drivers and fleets.
“Freezing duty is the right call, but it is only a partial solution. We would urge the Government to keep the situation under close review and stand ready to do more if pump prices continue to climb.”