Starmer’s cost-of-living adviser calls for fuel duty cut extension

Labour’s cost-of-living strategist urges prolonging fuel tax reduction

Labour’s cost-of-living adviser, Lord Walker, has called for the continuation of the 5p fuel duty cut beyond its planned expiry in September, citing recent petrol price increases linked to the US and Israel’s conflict with Iran. The measure, initially introduced by the previous Conservative administration in response to the Ukraine war, has now been in place for over four years. Walker argued that the current economic context necessitates reconsidering the policy’s extension or adjustment.

Global responses to Middle East energy crisis

Lord Walker highlighted that the Australian government recently implemented a 14p per litre reduction in fuel tax, suggesting similar actions could benefit the UK. He noted that nations worldwide are adopting varied strategies to manage the energy crisis, including Ireland’s petrol tax cuts, Slovenia’s introduction of fuel rationing, and Egypt’s directive to businesses to reduce energy consumption by closing early.

“I think given where we are, we do need to be thinking and talking about extending it or enlarging it,” Walker stated during an interview on BBC Radio 4’s Today programme.

Following the Iranian blockade of the Strait of Hormuz, global oil prices have surged, prompting renewed concerns about rising fuel costs. The shipping route, critical for transporting one fifth of the world’s oil and gas, has become a focal point of geopolitical tensions. This has led to forecasts of significant energy bill increases by July, as the next energy cap comes into effect.

Political divisions over fuel duty policy

Labour leader Sir Keir Starmer has maintained that the planned fuel duty increase will be evaluated in light of the Middle East conflict. However, some within his party have privately questioned his stance, while opposition parties have pushed for more immediate relief. The Conservatives, Reform UK, and the Liberal Democrats all argue that the war in Iran warrants keeping the cut in place.

Reform UK’s Treasury spokesperson, Robert Jenrick, advocated for halving VAT on petrol for three months, while Liberal Democrat leader Sir Ed Davey proposed an emergency 10p reduction. Chancellor Rachel Reeves emphasized that additional support would focus on households facing the greatest financial strain, with the Treasury asserting a responsible approach to managing the national economy.

“We have the right economic plan for a more volatile world… Fuel duty is frozen until September, and we’re enabling targeted support for those facing higher heating oil costs,” a Treasury spokesperson explained.

Amid growing pressure, the Green Party of England and Wales warned of potential household energy bill hikes of up to £300, urging the government to prepare for such scenarios. Meanwhile, the SNP called for devolving energy policy to Scotland, claiming independence could offer long-term cost savings. Plaid Cymru highlighted renewable energy investment as a key solution to mitigate future price fluctuations.