Chancellor John Healey has delivered his first budget, announcing several measures that are intended to save motorists money as they battle rising fuel prices.
Chief among the new measures is an extended freeze on fuel duty, maintaining the 5p-per-litre reduction on the tax until July 2027.
The freeze had been due to expire on 31 December 2026, but the total duty on fuel will now be held at 52.95p per litre.
Healey said this decision was taken due to “the war in the Middle East still driving high fuel prices”.
The government said "the majority of the rise of inflation" from 2.6% in June to 3.5% in September was a result of the rise in motor fuel prices.
Fuel duty
Opposition leader Kemi Badenoch said she was "glad to see" fuel duty temporarily frozen but questioned why it couldn't be maintained at that rate for longer.
"We [the Conservative Party] froze fuel duty for 14 years; they can do better than that," she said.
Edmund King, president of motoring body the AA, said the duty freeze "only delays the price shock" when it is increased.
He added that the government "could have gone further and cut fuel duty by an extra 5p, even if only for diesel", arguing that increased income from VAT (due to inflated prices) could have offset a resulting loss in revenue. "Delaying the fuel duty increase is a welcome trick but no treat for drivers," he said.
Rod Dennis, senior policy officer for the RAC, said: "A freeze only avoids making an already difficult situation worse; it doesn’t make filling up any cheaper. And it’s worth remembering that pump prices still soared this summer, despite fuel duty being at this very same reduced rate."
EV charging
Healey confirmed that the temporary removal of VAT on domestic electricity will be extended until July 2027.
Although this measure isn't directly targeted at motorists, those capable of charging EVs and PHEVs at home stand to make savings as a result.
However, electricity drawn from a public EV charger will continue to be charged VAT at a rate of 20%.
King said this "widens the pavement tax" – the inequity between those capable of home charging and those who aren't – and called it a "missed chance" to incentivise uptake of EVs.
The government said it's considering allowing EV drivers to access domestic VAT rates at public chargers and is "taking immediate steps to establish a taskforce" on the issue.
It added that it will make £100 million available to reduce prices at "local, lower-powered public charge points" to narrow the gap.
This funding will be split across two fiscal years, with £50m to be spent in 2027-28 and the other £50m in 2028-29.
Vicky Edmonds, CEO of lobby group Electric Vehicle Association England, said the £100m funding is "welcome" but it's "disappointing that we still see no movement from government" on reducing VAT on public charging.
