A planned increase in fuel duty has been scrapped to help motorists faced with rising pump prices as a result of the war in Iran.
Prime Minister Sir Keir Starmer told MPs the 5p per litre fuel duty cut introduced by the Conservative government in March 2022 would be extended for the rest of the year.
That means the rate will remain nearly 53p per litre.
Rates were previously planned to increase by 1p per litre on September 1, with a pair of 2p per litre rises on December 1 this year and March 1 next year.
Iran’s restrictions on tankers passing through the Strait of Hormuz means the average price of a litre of petrol and diesel at UK forecourts is 26p and 44p respectively more expensive than before the conflict started on February 28.
Sir Keir said: “Families across the United Kingdom are facing impacts of a war that we did not choose.”
He said: “This is not our war, but while the parties opposite wanted to jump into it, Labour will always protect working people.”
Steve Gooding, director of motoring research charity the RAC Foundation, said: “Although today’s news on fuel duty won’t have the immediate effect of bringing forecourt prices down, at least it shows that ministers have registered the financial pain caused by rampant pump prices for individuals and for business.
“Since the start of the Iran conflict, drivers have already paid a war premium of a staggering £3 billion in inflated fuel prices, half-a-billion of which has gone to the Exchequer in VAT receipts.”
Sir Keir also announced that hauliers would benefit from a “12-month road tax holiday”.
The Treasury said they would pay £1 at their annual renewal, saving £600 for a typical heavy lorry and £912 for the biggest vehicles on the road.
The RAC said on Tuesday that the average price of a litre of petrol at UK forecourts was 158.5p, which was the most expensive level since December 2022.
It warned that wholesale costs mean pump prices are likely to reach at least 160p per litre in the coming weeks.
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