Social Market Foundation welcome possible fuel duty rise after years of campaigning

The Social Market Foundation welcomes news that Chancellor is set to not renew a ‘temporary’ 5p cut in fuel duty at the upcoming Budget. Ending the duty cut could raise £15 billion for the Exchequer.

Responding to plans of a 7p rise in fuel duty, Gideon Salutin, SMF transport policy lead, said:

“The Social Market Foundation welcomes reports that the Chancellor is considering raising fuel duty by ending the temporary 5p cut and allowing rates to rise with inflation. This is long overdue. Since 2010, the government has foregone over £130bn freezing and cutting fuel duty to date, and the combined impact of this enormous cost only saves the median household £13 per month.

Ending this policy would follow recommendations we have made in our research which highlight the fiscal cost of fuel duty cuts and the disproportionate benefits enjoyed by higher income households. We have also made clear the limited impact that freezes have had on poverty, despite widespread rhetoric that they are designed to help hard-pressed drivers. It is gratifying to see these recommendations making an impact.

While it is true that this decision is not set in stone, the tide is clearly turning. This month’s announcement could end subsidies going to rich households while raising over £15 billion for the Exchequer.”

The SMF has been championing reform to fuel duty for years – noting the disproportionate loss in tax revenue against only a saving of £13 per month for the average household (See notes for full list of SMF work). Over the time in which fuel duty has been cut and frozen, other costs related to motoring have continued to rise, and as local transport services are cut, people are forced to stick to expensive cars, the SMF has said.