The United Kingdom government has announced an extension of the freeze on fuel duty, postponing a planned September increase until the end of the year. This decision means the 5 pence per litre cut on petrol and diesel will remain in place for several more months.

The fuel duty reduction was initially implemented in March 2022 by the previous Conservative government following Russia's full-scale invasion of Ukraine, which significantly impacted global energy prices. The measure was intended to last for 12 months but has been repeatedly extended.

Prime Minister Keir Starmer stated in the House of Commons that the government is "backing drivers" by continuing the freeze. Downing Street estimates the extension will cost £455 million for the current tax year, attributing the government's ability to maintain the freeze to improved economic growth figures.

The decision comes as fuel prices have seen a notable increase since the start of the conflict between the US and Israel, which has disrupted global oil and liquified natural gas supplies. The average price of petrol reached its highest point since early 2022 on Monday, according to the RAC.

In addition to the fuel duty freeze extension, Starmer announced plans to reduce the fuel duty rate on red diesel by over a third, to 6.48p per litre, from mid-next month until year-end. This measure is expected to benefit farmers who rely on red diesel for tractors and other agricultural machinery.

Furthermore, a 12-month "holiday" on vehicle excise duty for heavy goods vehicles (HGVs) was also introduced. The government indicated this would help mitigate higher supply chain costs affecting the haulage industry, which can ultimately impact consumer prices. This HGV measure is anticipated to save hauliers approximately £600 per typical heavy lorry.

Despite the extension, questions remain about future fuel duty policy. RAC head of policy Simon Williams noted that it is unclear whether drivers will face the full 5p increase in one go next spring, if a new phased approach will be adopted, or if the government might abandon any increase altogether.

Conservative leader Kemi Badenoch thanked Keir Starmer for what she termed a "U-turn" on fuel duty, stating her party had advocated for this in March. Shadow chancellor Sir Mel Stride claimed the government was compelled to reverse its stance due to pressure from the Conservatives.