There are warnings that petrol and diesel prices could soar by as much as 12p a litre next year. Spending watchdog, The Office for Budget Responsibility pointed to a 'planned 23% increase in the fuel duty rate' in late March in its new analysis.
It said the hike would add £5.7billion to Government receipts next year and represent a 'record cash increase'.
In its latest economic and fiscal outlook - to coincide with Thursday's Autumn Statement - the OBR said such a rise would be "the first time any Government has raised fuel duty rates in cash terms since 1 January 2011". It added: "It is expected to raise the price of petrol and diesel by around 12 pence a litre." You can get more money news and other story updates straight to your inbox by subscribing to our newsletters here.
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Chancellor Jeremy Hunt was immediately warned not to go ahead with any such rise in fuel duty amid the cost-of-living crisis, and with the misery motorists have already suffered due to sky-high pump prices in recent months. Tory MPs and motoring campaigners vowed to fight a 'ridiculous' hike to fuel duty - although the Treasury attempted to play down concerns by insisting no final decisions had yet been taken on next year's fuel duty rate.
In response to a question from a BBC Breakfast viewer, Mr Hunt said: "Let me clear that up. That is not a government policy. We will make a decision on that at the next budget in the spring. And that was just an assumption that the OBR made. They're an independent organisation, they make assumptions and we have made no decision on that at all."
Howard Cox, founder of the FairFuel UK campaign, vowed to "load both barrels" to fight a fuel duty increase "tooth and nail". He said: "It would be churlish for me on behalf of 1.7m supporters not to welcome the continuing freeze in the regressive fuel tax, but I am alarmed that this freeze still may not be prolonged past the 2023 Spring Budget. This Government continues to be fiscally inept and ignores the need to increase all our disposable incomes. That single act would ease the cost-of-living crisis."
"So why not Cut Fuel Duty? They never give a reason this tax reduction is wrong, they simply don't do it! All independent economists say it would cut inflation, increase wages, deliver business investment, grow GDP and, most importantly, more growth tax receipts. Why not try it for 12 months and see if it benefits the economy? No answer is the stern reply!"
He added: "Why does this Government continue to ignore the chronic opportunistic profiteering in the fuel supply chain, by not introducing PumpWatch. Cutting duty and making pump pricing transparent and fair, would make inflation plummet. They are popular vote-winning tactics. Yet once in Cabinet, these proven principles are dumped by Ministers in favour of fiscal myopia and baseless green idealism.”
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