Chancellor yet to decide on 23 per cent fuel duty rise

Sarah Tooze, Consumer Editor
Mon, 21 Nov 2022

• Government will make a decision on fuel duty in Spring Budget 2023
• Office for Budget Responsibility (OBR) suggests a 23 per increase in fuel duty was planned for March 2023
• Government urged to develop a "fair taxation system that can eventually replace fuel duty"

Motorists will have to wait until the next Budget in Spring 2023 to find out whether there will be a 23 per cent rise in fuel duty.

There was no mention of fuel duty in the Autumn Statement although the Office for Budget Responsibility (OBR) released a report that day which referenced a “planned 23 per cent increase in the fuel duty rate in late-March 2023, which adds £5.7bn to receipts next year”. 

“This would be a record cash increase, and the first time any Government has raised fuel duty rates in cash terms since 1 January 2011. It is expected to raise the price of petrol and diesel by around 12 pence per litre,” the report said.

However, when questioned on BBC News about the rise, the Chancellor of the Exchequer Jeremy Hunt said it was “not Government policy” and that a decision would be made at the next Budget in the spring. 

Call for 'fairer' system to replace fuel duty

Commenting on the OBR report, RAC head of roads policy Nicholas Lyes said: “The Government has always made a big deal of cancelling duty rises in the past and will face colossal pressure to do the same next year – after all, a rise of these proportions would heap yet more misery on the millions of households that depend on their vehicles, most of whom will just endured one of the costliest winters on record.

“Instead, we urge the Government to focus on giving serious thought to developing a fair taxation system that can eventually replace fuel duty, which is effectively on borrowed time given the numbers of zero-emission vehicles on the roads that pay no fuel duty whatsoever.

"Our research suggests drivers broadly support the principle of ‘the more you drive, the more tax you should pay’, with more than a third (36 per cent) saying a ‘pay per mile’ system would be fairer than the current regime – although three-quarters (75 per cent) are concerned the Government might use such a system as a way of increasing the amount they are taxed.”

In March 2022 the Government reduced fuel duty by 5p per litre and later commissioned the Competition and Markets Authority (CMA) to review the fuel market. The CMA is due to publish a full market study in spring.  

Ask HJ

Is a diesel still better than petrol for high mileages?

I have been a diesel car driver covering around 30,000 per year for the last 10 years and would like to add my two pence to the conversation. Along the A1, the cheapest fuel I have found is at Tesco Huntington, with petrol at £165 and diesel at £183. Comparing a BMW F30 320d and 320i M Sport Auto using an online tool, I think the petrol is a better option even at 25,000 miles per year. According to the website, I will get 50.2mpg from diesel and 38mpg from petrol. At 25,000 miles per year, diesel is £4,475, and petrol is £4,900. I agree that the petrol version will cost an additional £425 per year. However, with the purchasing price difference of about £2,000, the breakeven point will be at year four. Calculating the additional cost of higher insurance, servicing, and AdBlue for the diesel car will equate to a breakeven point at year five. As you might have noticed, I have not included DPF in my costing for the diesel or usage of E10 petrol in my costings. How can Honest John continue to recommend diesel below 30,000 miles per year?

Our Real MPG data suggests readers see 51.4mpg on average from the 320d and 33.1mpg from the 320i. If you're covering 25,000 a year at 166.54p/litre (the average petrol price this week according to the RAC's Fuel Watch) in the 320i, you'll pay £5718.32 a year in fuel. If you're covering 25k a year at 190.49p/litre (diesel) at 51.4mpg, you'll pay £4211.99 in fuel. That's quite a significant saving of more than £1,500 every year. Running costs aside, diesels are generally better suited to long-distance driving than petrols. They have more low-down torque which makes them more relaxed on motorway drives. They have a longer range, so you'll have to stop and refuel less often. And, if you're covering 25,000-plus a year on the motorway, you're unlikely to have issues with the DPF as it'll regenerate regularly and not get clogged up.

Answered by Andrew Brady

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Most fuel efficient petrol small SUV?

What's the best petrol small SUV for mpg?

The best small SUV for real-world MPG is the Toyota Yaris Cross hybrid, which will easily return upwards of 60mpg. If you want a pure petrol model though, check out the 1.0-litre TSI engine in the Skoda Kamiq or the 1.2-litre Puretech 130 in the Peugeot 2008/Vauxhall Mokka. These are all capable of up to 50mpg, or more if you're gentle on a long run.

Answered by Lawrence Allan

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