The Office for Budget Responsibility (OBR) is predicting a hike in fuel duty in 2023, despite the chancellor, Jeremy Hunt, making no mention of an increase in his Autumn Budget last week.
The OBR, an independent body that provides analysis of the public finances, is expecting to see around 12p added on to the price of a litre of fuel, representing an increase of around 23 percent. The increase would trample the fuel duty reduction, implemented by the then chancellor Rishi Sunak in the spring of this year. Fuel duty, the amount of tax paid on a litre of fuel, currently sits at 52.95p, and the rumoured increase could add nearly £6b to the government coffers as it attempts to right the economy.
Is a fuel duty rise incoming in March 2023?
Mr Hunt was quick to quell the prospect of a fuel duty increase, and spoke to the BBC shortly after the OBR report was made public. “That is not a government policy. We will make a decision on that at the next budget in the spring.” He said. “That [increase in fuel duty] was just an assumption that the OBR made. They’re an independent organisation, they make assumptions and we have made no decision on that at all.”
The worry of a price increase has got motoring organisations, lobby groups, and businesses up in arms, with Logistics UK chief executive David Wells calling it a “body blow” that could break an already overstretched industry. “With businesses already under financial pressure, and operating on very narrow margins, a duty hike of this magnitude would have significant impacts, for operating costs and, ultimately, on inflation,” he said.
While the price increase would add to the cost of filling up your bike, it’s the invisible cost that you will likely feel the most. With the majority of freight shipped across the UK by road, the knock-on effect could hit the price of the everyday products we use and consume.
RAC head of road policy, Nicholas Lyes concluded:
“As things stand, drivers will face an enormous hike in the cost of fuel next Spring due to fuel duty going up.
“The OBR expects to see 12p added to a litre of fuel, as a result of the current 5p duty cut coming to an end combined with its scheduled rise – something that’s not been seen for over a decade due to duty being frozen in successive Budgets.
“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.”
