The Office for Budget Responsibility (OBR) says that drivers could be hit with a 23% hike in fuel duty from March 2023.

With motorists facing record pump prices at the start of the year, fuel duty was cut by 5ppl in March by the then Chancellor, Rishi Sunak. This came after duty had been frozen at 57.95ppl since 2011.

Uncertain duty

However, this reduction in fuel duty was a temporary measure and is due to end next spring.

According to the OBR report on the budget statement yesterday, it describes a “a record cash increase” that will swell Treasury coffers with an additional £5.7 billion in taxes.

Published alongside the Autumn Statement, the OBR’s economic and fiscal outlook, says the “record cash increase” would equate to an additional 12p per litre (ppl) on petrol and diesel, swelling Treasury coffers with an additional £5.7 billion in taxes.

At present average fuel prices of £1.64 (petrol) and £1.88 (diesel), these would rise to £1.76 and £2 respectively.

Beware the budget

The Government has always made a big deal of cancelling duty rises in the past. RAC’s head of roads policy, Nicholas Lyes, believes it will face “colossal pressure” to do the same next year.

“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,” he said.

The Treasury has said a final decision would not be taken until the next budget in spring 2023.

On the forecourt

Current prediction for forecourt prices are expecting a general reduction in pump prices over the next few months. However, the consequences of the war in Ukraine, high inflation and Opec production decisions make pricing highly volatile. A rise in fuel duty would exacerbate this.

The budget statement also had a sting in its tale for electric vehicle (EV) drivers. Up until not, no Vehicle Excise Duty (VED) had to be paid for EVs. This was to encourage their take up by motorists looking to buy a new car, reducing emissions and cutting both local and global pollution.

However, from 2025, VED will be due on all EVs too.