Starmer’s cost-of-living adviser calls for fuel duty cut extension

Starmer’s cost-of-living adviser calls for fuel duty cut extension

Political pressure mounts over energy price spikes

Lord Walker, the Labour peer and cost-of-living adviser, argues the fuel duty cut should be extended beyond September, when it is set to expire after more than four years. The reduced tax rate for petrol and diesel was introduced by the prior Conservative administration following Russia’s invasion of Ukraine in 2022, which led to a surge in energy prices. Now, the recent rise in fuel costs—linked to Iran’s blockade of the Strait of Hormuz—has reignited calls for policy adjustments.

“I think given where we are, we do need to be thinking and talking about extending it or enlarging it,” Walker told BBC Radio 4’s Today programme on Friday.

The 5p reduction has been a key part of the government’s efforts to ease the burden on households. However, with oil prices surging again due to Middle East tensions, concerns over affordability have grown. Walker pointed to Australia’s recent decision to reduce fuel taxes by 14p per litre as a potential model, suggesting similar measures could benefit the UK economy.

Global responses to energy crisis

Countries are reacting to the crisis in different ways. Ireland has lowered petrol and diesel taxes, while Australia has halved fuel duty for three months. Slovenia, in a bold move, has become the first EU nation to implement fuel rationing. Meanwhile, Egypt has asked businesses to cut energy use by closing early. These actions highlight the urgency of addressing rising costs.

Starmer has previously stated the planned fuel duty increase would be “under review in light of what is happening in Iran.” The Labour leader acknowledged the challenge of managing the economic fallout from the conflict but remains cautious about long-term commitments. A new energy cap, effective since 1 April, has been introduced to protect consumers, though bills are expected to climb sharply when the next cap applies in July.

Political divisions over energy support

Chancellor Rachel Reeves emphasized that additional support would be focused on those facing the greatest financial strain. A Treasury spokesperson defended the current approach, saying: “We have the right economic plan for a more volatile world, taking a responsible approach to supporting working people in the national interest.” The statement also noted the frozen fuel duty until September and plans to tackle unfair price rises.

Political factions are divided on the issue. The Conservatives, Reform UK, and the Lib Dems have all argued that the Iran conflict justifies keeping the tax cut in place. Kemi Badenoch of the Conservatives warned that Starmer might be “forced to announce another humiliating U-turn,” while Reform’s Robert Jenrick called for a temporary halving of VAT on petrol. The Green Party and SNP have pushed for broader measures, including devolving energy policy and targeting potential bill increases of up to £300 per household.