Chancellor Rachel Reeves is expected to scrap plans for a 5p per litre fuel duty increase from September as part of a package aimed at helping families and businesses manage rising costs linked to the Iran conflict.
Fuel prices have surged since the closure of the Strait of Hormuz, with petrol rising from 132.9p to 158.2p per litre and diesel increasing from 142.4p to 186.8p.
The Treasury move, expected to be confirmed on Thursday, would retain the current 5p fuel duty cut introduced in 2022 following Russia’s invasion of Ukraine. The reversal is estimated to cost £2.4 billion.
Reeves is also drawing up targeted support on energy bills for low-income households ahead of autumn.
Steve Gooding, director of the RAC Foundation, said: “A decision not to raise fuel duty will be a relief for tens of millions of drivers, not least those reliant on diesel who have borne the brunt of the financial pain at the pumps since the end of February.”