British homes left behind as Europe cuts fuel duty

Chancellor Rishi Sunak has come under increasing pressure to cut fuel duty and take the heat out of rising energy bills, with at least 50 Tory MPs pressing for change.

Households face the worst cost of living crisis in more than 50 years, as annual energy bills will rise by £693 on average next month. The price of gas has soared across Europe and many governments have intervened to alleviate the strain. The Netherlands, Ireland and France have all cut taxes on household energy bills.

The British Government announced it will “take the sting” out of rising costs by offering grants of up to £200 in the form of energy bill discounts to 28 million households from October. The discount will be recovered in £40 instalments over the next five years.

However, critics have said more should be done to reduce costs for motorists, which have risen following Russia’s invasion of Ukraine.

The Treasury will take an extra £2bn in revenue from fuel taxes at current prices as motorists pay more to fill their cars. A litre of petrol costs more than £1.70 at some forecourts and the price of diesel rose by 13p in a week, the fastest increase on record.

Fuel duty, currently set at 57.95p on every litre, has been frozen since 2011. A cut to this would be offset by the windfall from the higher take from 20pc VAT added to pump prices.

Mr Sunak could also reduce VAT. A drop to 15pc VAT would reduce the cost per litre by 6p, according to the RAC, a motoring group.

Here’s what Britain’s neighbours are doing to help tackle the energy crisis.

THE NETHERLANDS The Dutch government stepped in early to help families, cutting taxes on energy bills from Jan 1 in a programme worth €3.2bn (£2.7bn) this year.

Excise duty has been dropped by 17 cents per litre of petrol and 11 cents per litre of diesel, and the VAT rate on energy has been reduced. Cuts in energy taxes should save households €400 a year on average.

IRELAND Last week, Ireland pledged to cut tax on energy bills, slashing excise duty on petrol by 17p and 13p on diesel. This follows an announcement last month that Irish households would receive a €200 cut to all domestic electricity accounts and a 20pc discount on public transport costs until the end of the year.

SWEDEN The Nordic country has rolled out a SEK13bn (£1bn) programme to cut taxes on petrol in a bid to shelter households from larger rises in costs. All car owners will also receive a cash grant from the Swedish government.

FRANCE There are plans to cut bills by introducing a rebate of 15 cents per litre on fuel from Apr 1. This will last for four months and will cost an estimated €2bn.

The country has spent €20bn to cut energy bills so far.

The rebate will save €9 for those who fill up a €60 tank. It will be automatically deducted before drivers pay at petrol stations.

In October the French government announced that gas and electricity prices would be capped in 2022 and unveiled plans for €100 petrol vouchers for low-income households.

The government has capped energy bill rises at 4pc this year for energy giant EDF, which said it expects to take a €26bn hit from the curbs.

ITALY Italy approved support measures worth €6bn last month to cut levies on energy bills. This is in addition to the €10bn set aside in July 2021 to tackle rising oil and gas prices. Electricity prices in Italy rose by 55pc at the start of the year and gas prices by 42pc as the country’s energy regulator Arera raised costs.

NORWAY The Norwegian government has rolled out some of the most generous plans, introducing a subsidy to cover 80pc of electricity bills where the market price is above 70 krone (6p) per kilowatt-hour. This was due to run until April 2022 but has been extended until March 2023, it confirmed last week. Consumption is capped at 5,000 KWh per month.

GERMANY Germany’s ruling parties have also acted to protect households from the worst of the price increases. A green surcharge levied on electricity bills will be scrapped, saving the average household an estimated € 150 a year. The government is also offering grants to low-income households and increasing the commuter allowance.