Lobby group FairFuelUK is asserting that it has “credible intelligence” indicating the government plans to increase fuel duty by 10p per litre in the upcoming October Budget.
This claim follows a warning from Prime Minister Keir Starmer to the Commons that the UK’s economic situation is “worse than we ever imagined,” blaming the previous Conservative government for a £22bn deficit.
Under the Conservatives, fuel duty has remained frozen, and in this year’s March Budget, it was reduced by 5p per litre.
FairFuelUK observed that while Starmer stated there would be no hikes in income tax, VAT, or national insurance during his recent speech, he made no mention of fuel duty.
Howard Cox, the founder of FairFuelUK, stated, “I have credible intelligence that the Treasury has nearly finalized plans, through its internal economic modelling, to raise fuel duty by 10p per litre.
“For nearly 15 years, I have demonstrated that increasing taxes on one of the most heavily taxed sectors—motoring—would harm the economy, jobs, inflation, business investment, and freedom of movement.
“This harsh increase will also suppress growth, which may explain why Labour’s central election campaign message was absent from his speech.
“It’s likely that the October Budget will also introduce Big Brother pay-per-mile taxation, which Labour plans to implement alongside the declining fuel duty income.
“I predict that, as a result of the October Budget, the UK’s 37 million drivers will face the most severe financial burden since 1997-2010, when Labour raised fuel duty by an astonishing 46%.”
Logistics UK is urging Chancellor Rachel Reeves to maintain the current fuel duty rate to help the industry support economic recovery.
The association estimates that a 44-tonne diesel HGV currently incurs a weekly fuel cost of around £888, with £436 of that going to HMRC as fuel duty.
Kevin Green, Policy Director at Logistics UK, commented, “With our sector already operating on extremely narrow margins—often only 2.5%—any increase in fuel duty would place immense cost pressure on operators.
“This would leave little room for our industry to take the necessary steps towards a net-zero future without passing the costs onto consumers, something our members are reluctant to do.
“With rising wage costs and new vehicle prices, the pressure on the logistics industry continues to grow, at a time when our sector is crucial to driving economic recovery and growth.
“Rather than stifling the increased economic activity our industry can generate, we urge Ms. Reeves to consider alternative measures to close the fiscal gap.”
The Road Haulage Association (RHA) has also expressed concern, citing a 10% rise in insolvencies in the haulage sector over the past year.
Richard Smith, RHA Managing Director, stated, “The cost of operating an HGV has increased by 10% over the last year, leading to the closure of numerous haulage businesses, with some running at a loss and profit margins completely eroded. The average profit margin in our sector now stands at just 2%.
“Last year, almost 500 hauliers went out of business, and unfortunately, over 250 more have done so this year, with a 10% increase in sector insolvencies compared to the same period in 2023.”
Regarding fuel costs, Smith noted that they account for a third of an operator’s expenses. “Hauliers are at a competitive disadvantage in the European market, as diesel prices remain significantly higher here than in most European countries.”
He called on the government to address supply and demand issues by incentivizing the adoption of low-carbon fuels like Hydrotreated Vegetable Oil (HVO), which can reduce emissions by 90%, and to introduce a fuel essential user rebate linked to emissions reduction.
“Such measures would align UK fuel duty levels more closely with those across Europe,” he said.
When asked about FairFuelUK’s claim that fuel duty is set to rise, a Treasury spokesperson responded, “Following the spending audit, the Chancellor has made it clear that difficult decisions regarding spending, welfare, and tax will be necessary to repair the foundations of our economy and address the £22bn hole in public finances left by the previous government.
“Decisions on how to achieve this will be made in the context of the Budget as a whole.”
