Many drivers yet to feel full benefit of 5p fuel duty cut

Sarah Tooze, Consumer Editor
Thu, 31 Mar 2022

• Chancellor cut fuel duty by 5p-per-litre to counter record fuel prices
• Major supermarkets, along with BP-owned and Shell-owned stations, have applied the cut
• Independent fuel stations defend criticism that they have kept prices high 

Motorists are still waiting to feel the full benefit of the Chancellor’s 5p per-litre fuel duty cut at many fuel stations.

The average price of petrol has only fallen by 3.49p (from 167.01p to 163.52p) since the Chancellor Rishi Sunak announced the cut in his Spring Budget on 23 March.

Diesel has seen an even smaller reduction - just 2.43p, with the average price dropping from 179.90p on 23 March to 177.47p on 29 March, according to the latest data from the RAC. 

Its head of policy Nicholas Lyes warned on the day of the Spring Statement that there was  “a very real risk retailers could just absorb some or all of the duty cut themselves by not lowering their prices".

The 3.49p and 2.43p reductions so far reflect the fact that major supermarkets, along with BP-owned and Shell-owned fuel stations have applied the 5p cut (6p including VAT). However, a number of independents have yet to cut pump prices. 

BP owns 300 of its 1,200 branded sites while Shell has around 1,100 sites in its UK network - about half of which are company owned, and there are many more independent garages outside their networks. 

Transport secretary Grant Shapps (pictured below) last week urged drivers to boycott petrol stations which refuse to cut prices.

He said: “Help us with this…shop around so that they learn that if they don’t pass this on, then they are going to lose business.”

Howard Cox, founder of the FairFuelUK Campaign, said that he was “furious” at retailers for not passing on the fuel duty cut to drivers.

“This is sickening exploitation, which this Government could check,” he said, repeating his call for the Government to introduce an independent pump pricing watchdog. 

The Petrol Retailers Association (PRA), which represents independently owned forecourts (around 65 per cent of forecourts), defended the actions of its members. 

In a letter to Shapps the PRA explained that the average dealer forecourt would be unable to pass on the fuel duty cut to consumers immediately, as they first have to deplete their existing stock which was purchased before the cut took effect at 6pm on 23 March.

It said that it wrote to the Chancellor ahead of the Spring Statement communicating this point, and that a 5ppl fuel duty reduction "would not be substantial enough to reduce the price burden on consumers".

The PRA also asked the Chancellor to backdate the cut to 1 March to allow members to sell their existing stock without the added duty.

Gordon Balmer, director of the PRA, said: “The PRA understands why motorists are frustrated with high fuel prices. The Government should have established in their announcement that any cut in fuel duty wouldn’t be immediately reflected in pump prices.

“Over the last few weeks, our members have been pricing fuel competitively despite market volatility. Many members are making negative margins, particularly on diesel.”

"The Government should have established that any cut in fuel duty wouldn’t be immediately reflected in pump prices." Gordon Balmer, PRA

Balmer added: “Smaller, independent forecourts operate as an integral part of local communities, often knowing customers personally. Their smaller volumes mean they are forced to respond to volatile market conditions to continue operations." 

Ask HJ

Why have fuel prices not reduced at my local BP petrol station?

I drive a BMW M2 Competition and from new I have endeavoured to use BP Ultimate. On 17 March I filled up at my local BP and paid £1.739 per litre. I again filled up at the same location on 24 March, the day following the Chancellor's Spring Statement, when I was charged £1.759 per litre. I queried this amount as I had been expecting the 5p reduction in duty to have been applied. The response from the cashier was that this was due to the price that the fuel had been bought in at and if the reduction was applied they would be selling at a loss. I am raising this with you as I am certain that if the fuel duty had been increased this would have been applied immediately. However it appears that reductions in prices are slow to be implemented. I would appreciate your views/advice.

Yes it's down to the individual fuel retailers to apply the 5p reduction. If they still have fuel bought at a higher price, as the cashier suggested, then they may choose not to apply the 5p reduction in fuel duty until they buy their next supply of fuel. The RAC warned about this happening shortly after the Chancellor's Spring Statement. However, some major supermarkets have reduced fuel by the full amount. BP and Shell also say they have reduced fuel by the full amount at the stations in their network which they own.

Answered by Sarah Tooze

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Ask HJ

Is fuel from Shell and BP better quality?

I normally buy from Shell regular unleaded. Is there a difference in quality from companies like Shell and BP compared to supermarket fuel?

Shell and BP will tell you there is but for the vast majority of cars on the road (performance cars and some classics excluded), standard fuel is more than adequate. All fuel - branded or non-branded - has to meet the same legal standards in the UK.

Answered by Sarah Tooze

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