Rising fuel prices ‘hand Treasury £2.3bn windfall from motorists’

‘The high price of fuel is contributing to the cost-ofliving crisis. It’s pushing up the cost of everything’

RISHI SUNAK has been accused of reaping a £2.3bn VAT “windfall” from motorists after diesel prices surged to another record high.

The average price of diesel rose to a record 180.32p a litre yesterday, while petrol climbed to 166.8p, taking it ever closer to the all-time high of 167.3p set in late March. Kwasi Kwarteng, the Business Secretary, wrote to petrol companies yesterday, urging them to pass on the savings from a 5p cut to fuel duty announced at the Spring Statement.

The RAC said retailers are still taking an average 2p per litre more in profit than before the relief was announced.

The motoring group said drivers were still paying as much as 30p in VAT on every litre of fuel they buy, adding that the levy was “proving to be the Treasury’s own windfall”.

The Treasury has raked in about £2.3bn in VAT on road fuel sales since Russia invaded Ukraine in late February, according to calculations based on government data. Rising pump prices increase the Government’s tax take, with the brunt of those extra costs borne by drivers. The RAC said rising oil prices meant it looked “inevitable” petrol prices would reach a new record high in the coming days.

Simon Williams, an RAC spokesman, said the Treasury could shave 7p off the price of a litre of petrol by reducing VAT on fuel to 15pc. “The high price of fuel is contributing to the cost-of-living crisis in its own right,” he said. “It’s pushing up the cost of everything. People are driving now more than they have done for a long time because of Covid.”

A Downing Street spokesman said: “The public rightly expect retailers and others in the supply chain to pass on the fuel duty cut at the forecourts. It’s the biggest cut ever on all fuel duty rates and can mean big savings for families.

“We know a number of retailers – big supermarkets Asda, Tesco and Sainsbury’s – are passing on the cuts and we will raise this with other retailers.”