21st May 2026
Responding to the Government’s announcement on fuel duty today, Jonny Marshall, Principal Economist at the Resolution Foundation, said,"The best that can be said of today’s announcement is that the Chancellor’s has wisely ignored calls for an expensive blanket cancellation of the temporary 5p cut to fuel duty.
“Nonetheless, even this modest extension will cost £210 million this year. That money could be better spent elsewhere, not least as the real cost of petrol is still lower today than it was pre-Covid.
“Come the autumn, low-income families – who are still £1,800 poorer than they were before the last energy price shock – will be worst affected by another round of rising food prices and energy bills. And yet the support announced today will primarily benefit those who are better off, with the richest fifth off households gaining more than twice as much as the poorest fifth.
“Over the past 15 years, successive Chancellors have backed off implementing already budgeted for fuel duty rises – the total cost of which has grown to £120 billion. The Chancellor must ensure that this extension doesn’t make that fiscal fiction even worse.”
Isaac Delestre, Senior Research Economist at IFS, said, "A 5p cut to fuel duties was first implemented as a one-year measure in March 2022, but has been repeatedly extended ever since. The Autumn 2025 Budget announced that it would be phased out gradually, with the duty rate rising by 1p on 1 September of this year before rising by a further 2p on 1 December and finally by 2p more on 1 March 2027. Today’s announcement delays the first two of these increases until 1 January 2027 (implying a 3p rise in fuel duties then and a further 2p rise on 1 March 2027). That delay will have a one-off cost to the exchequer of about £200 million. If the Chancellor were to keep the full 5p cut permanently, it would cost about £2.3 billion a year by 2029-30, relative to current forecasts.
“The government also announced a 12-month suspension of vehicle excise duty for hauliers and a one-third cut in the rate of fuel duty for users of red diesel. The latter will cost around £60 million.
“Two good principles for emergency support are that it should be temporary and targeted. As announced, these measures are temporary, but the government is likely to face pressure to extend them. The fuel duty cuts are targeted towards those households and firms most exposed to fuel price increases - though they will of course also weaken incentives to reduce fuel use.”