Use £1.9bn fuel windfall to help drivers, Rishi told

RECORD fuel pump prices could deliver the Treasury a £1.9billion windfall, analysis by The Mail on Sunday shows.

As drivers face paying up to £100 to fill their tanks this weekend, 50 Conservative MPs have joined motoring groups in calling for Chancellor Rishi Sunak to shave 5p-a-litre off fuel duty.

Ministers also privately complain that the Chancellor has been too slow to help drivers.

Experts say much of a 5p fuel duty cut would be offset by the windfall from 20 per cent VAT which is added to pump prices.

After the war in Ukraine pushed oil prices to record highs, the average forecourt price this weekend is 161p for unleaded and 170p for diesel, according to the RAC. Some filling stations are already charging £2 a litre.

Motorists are paying 6p a litre more in VAT than they were a year ago. If prices stay the same for a year, it would amount to £1.9billion of extra VAT, analysis reveals.

A cut in fuel duty – currently set at 57.95p on every litre – should stay in place until oil falls back down, the AA said.

Conservative MP Peter Bone said the Treasury should ‘effectively return [any extra income from fuel] to the taxpayer’, adding: ‘Every time fuel prices go up, the Government should be cutting the [fuel duty] rate to help mitigate the price rise.’

Former Minister Robert Halfon has been sounding out support in the Commons for a tax cut. Ireland and Poland have already introduced similar measures.

One Minister told The Mail on Sunday: ‘This is something we should be looking at.’

The AA’s Luke Bosdet said: ‘Fuel duty should be cut until oil falls to a level where pump prices are not crippling the finances of families that rely on their car for everyday lives.’

RAC fuel spokesman Simon Williams said: ‘Our calculations show Rishi can afford a 5p-a-litre cut in fuel duty – thanks to all the extra money being made from the VAT element which is slapped on top of the pump price.’

Last night Treasury sources suggested a fuel duty cut was not planned and that there are better ways to help motorists.