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Fuel duty cut needs to be more than 5p per litre, says RAC

The chancellor should cut fuel duty by more than the 5p per litre rumoured in the media say the RAC Foundation. 

A reduction of this amount would fail to reverse even half of the increase in prices seen at the pumps in the past two weeks.

According to data from the Department for Business, Energy and Industrial Strategy (BEIS) the average price of a litre of petrol increased by 12.4p from 153.0p on 7 March to a record 165.4p on Monday.

Over the same period diesel leapt 18.9p per litre from 158.6p to 177.5p.

It has been reported that in Wednesday’s spring statement the chancellor Rishi Sunak will announce that fuel duty will be cut by 5p per litre from the current level of 57.95p.The RAC Foundation publishes a weekly fuel fact sheet with the latest price and taxation information. 

The move would be similar to one already seen in the Republic of Ireland.

Steve Gooding, director of the RAC Foundation, said: “These official figures show why a fuel duty cut is needed and why it should be more than the 5p per litre that has been reported.“The Chancellor will have been benefiting from a rise in VAT income given the pump price increases, so he could afford to give something back to road users. 

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“Nor should he fear that a temporary cut in duty will lead to an increase in driving.

“With the current squeeze on household budgets, there won’t be many people rushing to do extra mileage even if there is some limited relief on the forecourts.”

Separate figures from data firm Experian Catalist – which uses a different methodology – show the average cost of a litre of petrol and diesel on Monday was 166.6p and 178.7p respectively.

That is a decrease of a fraction of 1p since Sunday.

Fuel duty is currently levied at 57.95p per litre on both petrol and diesel, with VAT at 20% charged on top of the total price, including duty.

Since the Russian invasion of Ukraine the price of a barrel of Brent crude oil has risen as high as $130. It is now standing around $115.

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