Keir Starmer on Thursday extended the temporary 5p cut in fuel duty and announced a 12-month vehicle tax holiday for the haulage industry, saying the move was needed to ease cost-of-living pressures. He told the Commons the government was backing drivers and hauliers for the rest of the year.
The package is expected to cost about £400m and comes before Rachel Reeves sets out more details on how it will be funded. Reeves had told lawmakers at the last budget that fuel duty would be frozen for nine months and that the temporary cut first announced by Rishi Sunak in 2022 would end from September, but Starmer said that timetable would now be pushed back.
Starmer cast the change as a response to pressure on households and businesses, saying: “There is more that we can do, and I can announce today that we are giving our hauliers a 12-month vehicle tax holiday, helping to keep prices down, and we are backing drivers by extending the freeze in fuel duty for the rest of the year.” He added: “This is not our war, but while the parties opposite wanted to jump into it, Labour will always protect working people.”
The Treasury said the fuel duty freeze would have saved the average driver £120 over two years by the end of 2026, while the one-year pause on vehicle excise duty would save £600 for a typical heavy lorry. It said the timing of any future 5p increase would be announced at the autumn budget, leaving open the question of whether the full rise would go ahead in January.
The decision was framed against a backdrop of higher fuel prices linked to the US-Israeli attack on Iran, which Reeves is due to address in more detail on Thursday. She said: “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.” She added: “By protecting households and businesses we are building a stronger and more secure economy for Britain. That is the right economic plan.”
The political edge to the announcement was sharpened by Starmer’s dig at the opposition leader, whom he accused of taking credit for events that had nothing to do with her. “I know the leader of the opposition likes to claim responsibility for things that have got literally nothing to do with her. In her mind, she won Eurovision on Saturday and scored the winning goal in the FA Cup final,” he said. But the immediate effect is clearer than the politics: fuel duty is staying lower for longer, hauliers are getting a year off vehicle tax, and the government is choosing to absorb the cost now rather than force drivers and businesses to carry it.
