Liberal Democrat leader Sir Ed Davey has called for an immediate 10p reduction in fuel duty, arguing that the temporary cut should remain in place until the Christmas period. The proposal is part of a broader package of policies designed to alleviate the cost of living crisis.
Davey is also pressing the government to abandon a planned permanent increase in fuel duty scheduled for January. The current freeze on fuel duties, originally introduced by the Conservative government in March 2022, was extended by the Labour administration. In May, Chancellor John Healey decided to delay a previously planned 3p increase, which was initially set for September, until the end of the year.
According to the Liberal Democrats, the proposed 10p cut would translate to a 12p drop in pump prices for consumers. Davey argued that drivers require immediate support, particularly as petrol and diesel prices have surged due to geopolitical tensions involving the US and Iran under the Trump administration. He maintained that the three-month intervention would ultimately pay for itself by boosting economic activity.
Estimating the policy would cost approximately £2bn, Davey claimed the measure would be self-funding when accounting for increased revenue from the energy profits levy, gas taxes, VAT, and renewed fuel duty collections stimulated by higher economic output.
Delivering a speech at his party’s conference on Tuesday, Davey outlined additional demands, including lowering the bus fare cap from £3 to £1 and reducing rail fares by 10%. He also called for the removal of VAT on public electric vehicle charging points and a review of network costs, which he described as unfair.
The proposal comes as Chancellor Healey faces mounting pressure to either raise taxes or reduce spending ahead of next month’s Budget, amid rising government borrowing costs. Labour Party chair Bridget Phillipson responded to Davey’s demands by noting that the government had already acted on fuel duties. She added that while Healey remains open to suggestions before the budget, she viewed the Lib Dem pitch as primarily political strategy tied to their conference.
£2bn cost during a spending crunch? Sounds like political theatre more than economic sense. The deficit won’t balance itself.
If the tax break actually reaches drivers instead of getting absorbed by oil companies, I’m for it. Worth a try.