Drivers demand fuel VAT cut in Budget as record petrol and diesel prices force spending cuts

One in three drivers wants the Chancellor to cut VAT on fuel in this week's Budget, according to the RAC.

The motoring organisation's survey found that a reduction would be more popular than a cut to fuel duty when John Healey makes his announcement.

A smaller group of motorists, around one in ten, would settle for fuel duty simply being held at its current reduced rate of 52.95p a litre. Some 29 per cent of those surveyed would like to see the duty cut further.

Without action, the duty is otherwise set to rise by 5p next March. The RAC's analysis calculated what is at stake for motorists in cash terms.

A further 2p-per-litre reduction in fuel duty would save drivers £1.30 on a tank of fuel in an average-sized car. A 5p cut would be worth £3.30 per tank.

The survey of 1,206 motorists also laid bare the wider toll of pump prices.

Sixty-five per cent said they are cutting back on other spending because of the cost of fuel, up from 61 per cent in April. Another 47 per cent said they are struggling to cope with costs now, a rise from 39 per cent in April.

Petrol and diesel prices have continued to climb this year, largely as a result of the conflict between the US and Iran, as well as disruption to global diesel supplies caused by Russia's war in Ukraine.

Diesel pushed past the record price of £2 a litre earlier this month. Average unleaded prices stand at £1.75 a litre, their highest in more than four years.

RAC senior policy officer Rod Dennis said: “It’s easy to forget that fuel duty is already lower than it was several years ago given it was cut by 5p in the early days of the Ukraine war.

“But this hasn’t stopped prices spiralling this year as a result of the ongoing conflicts in the Middle East.

“An end to hostilities and a lower oil price would deliver the greatest relief at the pumps, but this isn’t something that’s ultimately in the UK’s control.

“The extent to which drivers are taxed, however, most certainly is.

“Cutting fuel duty further should deliver some relief at the pumps while reducing VAT is another option available to the government and is narrowly preferred by drivers in our research.

“The two approaches work differently.

“A fuel duty reduction would take the same amount of tax off every litre of petrol and diesel while a VAT cut would produce a larger saving on the more expensive fuel.

“With diesel currently costing more than petrol, diesel drivers would therefore see a slightly greater cash saving.”

Ahead of Wednesday’s budget, the AA has called for a further reduction in fuel duty to help drivers with the cost of living.

“Young and low-income workers who rely on their cars to get to work or juggle more than one job desperately need relief at the pump to help make ends meet,” AA president Edmund King said.

“Otherwise, needing to stay on the road for commuting sucks large amounts of cash from their pay packets and forces cutbacks on essentials like eating and heating.”

Mr Dennis added: “For so many, using the car is a necessity and not a choice, and it’s important the government recognises that.”