Rishi Sunak has dropped a heavy hint that he will announce a cut in fuel duty in Wednesday’s spring statement.
The chancellor is under pressure from his own MPs to introduce measures to help the public cope with soaring bills.
According to data firm Experian Catalist, the average cost of a litre of petrol at as of last Tuesday was £1.65, while the average cost of a litre of diesel was £1.76.
Meanwhile, energy bills are set to rocket by £693 a year for the average household from April 1, when Ofgem increases its price cap.
Inflation, interest rates and council tax bills are also going up, adding to the pressure on household budgets.
Sunak has been warned that millions of households could be forced into fuel poverty and has been urged to bring in mitigating measures in his spring statement next week.
Asked on Sky News’s Sophy Ridge on Sunday whether he could cut fuel duty, the chancellor said he understood people’s concerns.
“Obviously I can’t comment on specific things, but what I would say, I understand that, I have a rural constituency, people are incredibly reliant on their cars and this is one of the biggest bills that people face, watching it go up, right, we’re all seeing that, when we’re filling up our cars,” he said.
“I get that, that’s why we’ve frozen fuel duty already, I announced that in autumn, it’s the 11th consecutive year of fuel duty freezes and that really helps people, I know that.”
Asked on the BBC’s Sunday Morning programme whether he was considering a 5p cut in fuel duty — as some campaigners are calling for — Sunak replied: “Again, I know this is frustrating for you frustrating and for people watching, I’m not able to comment on on tax policy, particularly in advance of the fiscal event.
“We’re the party that has frozen fuel duty for over a decade because we recognise the importance of people being able to fill their cars up and it not be prohibitively expensive.
“We understand that and that’s why we’ve acted for years already on this issue.”
In response, Labour has said it would not vote against moves to cut fuel duty if the chancellor does decide to slash the tax in his spring statement.
Shadow chancellor Rachel Reeves told Sky News’ Sophy Ridge On Sunday programme that her party would “not stand in his way” if Sunak did go ahead with the measure.
But she said cutting fuel duty by 5p would only reduce filling up a car with petrol by £2.
Instead she said the government should consider Labour’s proposal to introduce a windfall tax on the profits made by North Sea oil and gas companies.
“When I first said there should be a windfall tax back in January, we thought it would raise about £1.2 billion, but since then oil and gas prices have increased substantially and that surcharge, that windfall tax would now bring in about £3.7 billion,” she said,
“Instead of carrying on down the path this chancellor is going on, he should look again at Labour’s proposals for a windfall tax and use that to keep bills low for everybody else.”
Conservative MP Robert Halfon said it was “absolutely vital” the government cut fuel duty, saying there is “real fear out there”.
“People are really terrified about the literal triple whammy that they are facing, whether it is petrol and diesel costs at the pumps, the high energy bills and also general household bills as well, and that’s why it’s absolutely vital the government cuts fuel duty or VAT on fuel because it’s unsustainable for millions of people up and down the country.”