Chancellor facing backlash after substantial rise in fuel duty set for early 2023

The Chancellor Jeremy Hunt made no mention of fuel duty in yesterday’s announcement, but OBR expect fuel duty to increase by 23% next year.

Currently, fuel duty stands at 52.95p per litre for petrol and diesel, following the 5p reduction back in the Spring Budget, by then Chancellor Rishi Sunak.

Should the Government go ahead with the rise in price, then it would add £5.7bn to the Government’s budget to aid in the recovery of the economy.

The OBR stated: “This would be a record increase, and the first time any government has raised fuel duty rates in cash terms since 1 January 2011.”

However, in response, Hunt told the BBC: "Let me clear that up, that is not government policy, we'll make a decision on that at the next budget in the spring. That was just an assumption that the OBR made.”

Following his comments, Conservative MP Jonathan Gullis wrote a letter to the Chancellor, asking him to ‘listen to motorists, van drivers and truckers, who are already being smacked hard with cripplingly high taxation’ and to ‘have their backs by keeping the price at the pump down’.

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Although there has been a public outcry following news that fuel costs could rise rapidly again next year, The Treasury has insisted that no final decision has been made, and an official announcement would be made at next year’s Autumn Budget.

RAC head of roads policy Nicholas Lyes: “As things stand, drivers will face an enormous hike in the cost of fuel next Spring due to fuel duty going up.

“The OBR expects to see 12p added to a litre of fuel, as a result of the current 5p duty cut coming to an end combined with its scheduled rise – something that’s not been seen for over a decade due to duty being frozen in successive Budgets.

“The Government has always made a big deal of cancelling duty rises in the past and will face colossal pressure to do the same next year – after all, a rise of these proportions would heap yet more misery on the millions of households that depend on their vehicles, most of whom will just endured one of the costliest winters on record.

“Instead, we urge the Government to focus on giving serious thought to developing a fair taxation system that can eventually replace fuel duty, which is effectively on borrowed time given the numbers of zero-emission vehicles on the roads that pay no fuel duty whatsoever.

“Our research suggests drivers broadly support the principle of ‘the more you drive, the more tax you should pay’, with more than a third (36%) saying a ‘pay per mile’ system would be fairer than the current regime – although three-quarters (75%) are concerned the Government might use such a system as a way of increasing the amount they are taxed.”

What do you make of the report from OBR? And of the Chancellor’s response? Leave your comments below.