Kit PetersFUEL: Starmer freezes duty until end of year and cuts red diesel tax as pump prices hit highest level since Iran war began
Drivers across south-west Wales will be spared a further hit to their fuel bills after the Prime Minister confirmed at PMQs today that a planned 5p-per-litre rise in fuel duty — due to be phased in from September — is being postponed until the end of the year.
Swansea Bay News reported on Monday that Chancellor Rachel Reeves was expected to scrap the planned rise. Today’s PMQs announcement confirms it — the freeze is official.
In that report, we set out how households across south-west Wales have been hammered by soaring petrol and energy costs since the outbreak of the Iran conflict in February — with rural communities in Carmarthenshire and Pembrokeshire, where car dependency is high and public transport limited, particularly exposed.
The 5p cut was first introduced by the Conservative government in March 2022, when petrol was averaging 167p per litre. It was supposed to last 12 months but has been extended repeatedly — and will now remain in place until at least 31 December 2026.
The freeze comes as petrol prices hit their highest level since the start of the Iran war. The RAC reports the average price of unleaded petrol reached 158.52p per litre on Monday — and the direction of travel is still upward.
The relief does not extend to bringing prices down at the pump. Steve Gooding, director of motoring research at the RAC Foundation, welcomed the announcement but was clear about its limits. “Although today’s news on fuel duty won’t have the immediate effect of bringing forecourt prices down, at least it shows that ministers have registered the financial pain caused by rampant pump prices for individuals and for business,” he said.
Gooding did not mince his words on the wider cost of the Middle East conflict. “Since the start of the Iran conflict, drivers have already paid a war premium of a staggering £3 billion in inflated fuel prices, half a billion of which has gone to the Exchequer in VAT receipts,” he said.
The government has also announced targeted relief for farmers and hauliers — both significant employers across Carmarthenshire, Pembrokeshire and rural west Wales.
The duty rate on red diesel — used by farmers and rail freight — will be cut by more than a third, from 10.18p to 6.48p per litre, from 15 June until the end of the year.
Hauliers will benefit from a 12-month holiday on HGV Vehicle Excise Duty, meaning lorry operators will pay just £1 when they next renew — a saving of £600 for a typical heavy lorry and up to £912 for the highest-rated vehicles.
The BBC’s fact-checking unit, BBC Verify, estimates that extending the duty freeze to the end of the year will cost the Treasury around £240 million — though the government points out that rising pump prices are simultaneously generating more VAT revenue, since the 20% VAT on fuel rises with the price.
Petrol prices have been driven up largely by supply pressures following the effective blockade of the Strait of Hormuz waterway since the outbreak of the US-Israel war with Iran. The government has also announced it is loosening some sanctions on Russian oil refined into diesel and jet fuel in third countries to ease supply — a move that drew sharp criticism from the Conservatives at PMQs.
Political commentators noted the day’s announcements were a sign of how acutely aware the government is of cost of living pressures — and of how much worse those pressures could yet become before the year is out.
Today’s announcements came on the same day as official figures showed inflation fell to 2.8% in the year to April — down from 3.3% in March, a steeper drop than analysts expected, partly driven by lower energy bills following the government’s support package.
Analysts warn, however, that the improvement may be short-lived. Inflation is expected to rise again and could reach around 4% by the end of the year as the Iran war continues to push global energy prices higher — making today’s duty freeze look like a holding measure rather than a solution.
Related stories from Swansea Bay News
Drivers to get reprieve as Rachel Reeves set to scrap planned 5p fuel duty rise as pump prices soar in wake of Iran war
Our original report on Monday that Reeves was expected to freeze fuel duty — now confirmed at PMQs.
‘Scrap the VAT’: Senedd candidate says rural Carmarthenshire is being ‘hit first and hit hardest’ by fuel price surge
How soaring fuel costs are hitting rural communities in west Wales harder than anywhere else.
Fuel duty cut by 5p as cost of petrol soars to average 167.3p per litre
The original 5p cut in March 2022 that started the freeze now extended for another year.
