Drivers can expect £130 boost after Labour Party pledge

The continuation of the 5p reduction in fuel duty will help motorists save an average of £130 each year, it's claimed. Chancellor Rachel Reeves made the commitment in the Labour Party's budget announcement on Wednesday, October 30.

"While the cost of living remains high and with a backdrop of global uncertainty, increasing fuel duty next year would be the wrong choice for working people," the Chancellor said. Currently, the fuel duty rate for both petrol and diesel, including the 5p reduction, stands at 52.95p per litre.

This deduction is translating into an annual saving of approximately £130 for drivers, as reported by the price comparison website Confused.com.

The RAC has greeted the decision warmly. Simon Williams, the RAC's head of policy, expressed that motorists will "breathe an enormous sigh of relief", especially after rumours swirled about the possibility of the 5p cut being abolished.

Fuel duty, a levy embedded within the prices consumers pay for petrol and diesel, has remained unchanged at 57.95p a litre since March 2011. However, the Russia-Ukraine conflict induced spikes in oil prices during 2022, prompting a provisional 5p decrease in the tax, which Jeremy Hunt extended in March to keep fuel prices beneath the frozen tariff, reports Birmingham Live.

According to assessments by the RAC, this 5p discount is costing the Treasury roughly £2 billion each fiscal year. Ms Reeves highlighted the financial weight of maintaining such measures.

She said: "To retain the 5p cut and to freeze fuel duty again would cost over £3 billion next year. At a time when the fiscal position is so difficult, I have to be frank with the House that this is a substantial commitment to make."