UK Families Face 'Transport Poverty' as Petrol Prices Hit Fresh 'Milestone of Misery'

Chancellor Sunak implemented a 5p per litre cut in fuel duty on 23 March after average prices soared to 166.8p per litre of petrol and 180.3p per litre of diesel. On Monday, MPs in parliament debated calls for a 40 percent cut to fuel duty and VAT after more than 102,000 signatures were collected under a petition outlining the proposals.

The average price for a litre of petrol has exceeded £1.70 per litre for the first time ever, according to data firm Experian Catalist. The cost of diesel also reached a record high of £1.81 per litre.

Overall, petrol has become around 41p per litre more expensive over the past 12 months, according to the figures. A year ago today, petrol cost 129.0p a litre, with diesel costing 131.3p a litre.

The new prices are estimated as adding around £23 ($29) to the cost of filling a 55-litre family car.

RAC fuel spokesman, Simon Williams mourned yet “another unfortunate landmark".

“Though wholesale prices may have only just peaked last week, they are still worryingly high, which means there's no respite from the record-high pump prices which are so relentlessly contributing to the cost-of-living crisis,” the spokesman was cited by UK media outlets as saying.

Williams emphasised the need for the UK government to take more action to “ease the burden on drivers”.

“VAT at 20 percent on fuel is benefiting the Treasury to the tune of around 30p a litre, which seems very unfair when you consider it's a tax on a tax, as fuel duty - despite being cut to 53p a litre at the end of March - is charged at the wholesale level,” added Williams.

His remarks were made in a nod to reports that UK Chancellor Rishi Sunak was finalising a package of measures aimed at alleviating the cost of living crisis.

The Treasury’s measures have been prompted by a warning from the energy regulator, Ofgem, that household annual bills were anticipated to grow by more than 40 percent in October after regulator Ofgem raised the energy price cap in the autumn.

Steve Gooding, director of the RAC Foundation, warned that the “pain isn’t over yet”.

“Wholesale petrol prices are still close to recent highs and currently exceed those of diesel. As many people are looking anxiously at the prospect of ever higher bills to heat and light their homes, so too an increasing number of families are facing transport poverty,” Gooding was quoted as saying.

AA fuel price spokesman Luke Bosdet also deplored the fact that prices had passed “yet another milestone of misery along the road of record pump prices”.

On 23 March, Chancellor of the Exchequer, Rishi Sunak, implemented a 5p per litre cut in fuel duty for a year. The move followed average prices reaching 166.8p for petrol and 180.3p for diesel , with Sunak touting the measures as “the biggest cut to all fuel duty rates ever".

However, motoring association the RAC said the cut only took prices "back to where they were just over a week ago".

Furthermore, prices continued to grow on the back of the British, US and European Union sanctions on Russia since the launch of its special military operation in Ukraine on 24 February. UK Prime Minister Boris Johnson had vowed to "wean" his country off Russian oil and gas imports, despite the economic fall-out giving more pressure to Britons' already squeezed finances.

In another twist to the tale, since Sunak’s spring announcement, retailers have been accused of raising profit margins.

Parliament debated and shot down calls to reduce fuel duty and VAT by 40 percent on Monday after more than 102,000 signatures were collected under a petition outlining the two-year proposal.

The petition stated:

“The Government should reduce the cost of fuel through a reduction of 40 percent in fuel duty and VAT for two years. This can effectively offset the rise in fuel prices since 2020.”

However, exchequer secretary to the treasury, Helen Whately, pointed to the existing temporary fuel duty cut.

“Given that VAT is applied on top of fuel duty, the 5p duty cut on petrol and diesel does actually also result in a VAT reduction so it effectively translates to a reduction of 6p per litre overall… A VAT reduction generally isn't the best way to provide help with fuel costs particularly as it wouldn't help many businesses, many of which already claim back VAT paid on fuel used for business use,” said Whately.

Ahead of the debate on the petition, the government issued a statement, underscoring that “any reform to the present VAT treatment of road fuel would carry a significant cost to the Exchequer.”