Davey proposes £2bn temporary fuel duty cut before budget

Phillipson says Labour ‘already taken action’ as Healey prepares October budget

Liberal Democrat leader Sir Ed Davey has called on the UK government to cut fuel duty by 10p a litre until Christmas and to scrap a permanent increase scheduled for January. He will package the proposal into a broader cost-of-living plan in his party’s conference speech on Tuesday.

Davey described the three-month package as costing about £2bn and self-funding. “It’s a three-month package, a temporary package, but if you look at the extra money the government will get through the energy profits levy, from gas taxes, from VAT and fuel duty, it’s self-funding,” he said.

Davey said drivers should be supported and that a temporary three-month cut would pay for itself by stimulating the economy. He attributed the high cost of petrol and diesel to what he characterised as the Trump administration’s conflict with Iran, telling the BBC that “people need help now.”

Fuel duty was frozen under the Conservatives in March 2022, and Sir Keir Starmer’s government continued the freeze. In May, the government pushed back a planned 3p increase due in September until the end of the year. The Liberal Democrats say cutting 10p from fuel duty now would mean fuel dropping by 12p per litre at the pump.

Davey’s conference speech will also propose cutting the bus fare cap from £3 to £1, reducing rail fares by 10 percent, and dropping VAT from public electric-vehicle charging points. He will also call for a review of network costs the Liberal Democrats have labelled unfair.

Chancellor John Healey faces pressure to raise taxes or cut spending at his budget next month, amid soaring government borrowing costs, according to the BBC.

Labour Party chair Bridget Phillipson told the BBC’s Laura Kuenssberg that the chancellor would consider the proposal ahead of the budget. “I’m sure John Healey will be open to any and all suggestions ahead of the budget but actually this is an area where the Labour government has taken action on fuel duty already,” Phillipson said.

Phillipson framed the proposal as part of the conference-season political contest. “Whilst I recognise what the Lib Dems have to say on this topic, this is the element of politics about it — they’ve got their conference, they’re making their pitch, good luck to them,” she said.