Fuel duty revenue was down by £2.4bn in April and May compared with the same period last year as the coronavirus pandemic and resulting lockdown brought the number of drivers on the UK’s roads tumbling down.
Revenue from the duty on diesel – charged at 57.95 per litre – was the hardest hit, with duty down by 49 per cent during the two strictest months of lockdown resulting in £1.5bn in revenue – down from the £2.9bn recorded in 2019.
In May alone diesel fuel duty generated £695m for the Treasury, compared with £1,411m in 2019. April saw £815m raised as opposed to £1.5bn a year earlier.
The same two-month period in 2019 saw petrol duty generate £1.6bn in revenue, yet in 2020 just £634m came in. It equates to £317m a month – some £493m less than the average duty petrol has brought in each month since 1990.
The figures from RAC analysis of HM Revenue and Customs data show that diesel and petrol revenue fell to £2.2bn in total, down from the £4.5bn collected in 2019.
Nicholas Lyes, RAC head of roads policy, said: “The financial impact of the coronavirus on the Government has clearly been immense. The lost revenue on fuel duty is a further blow to the public finances and while motor traffic volumes have recovered during the summer, they are still between 10-15% below pre-lockdown levels.
“The temptation for the Chancellor might be to recoup some of the losses by increasing fuel duty, but with the country staring down the barrel of one of the sharpest recessions on record such a move would risk choking any economic recovery at a time when drivers and businesses are most struggling.
“This perhaps gives the Government a glimpse into the future of when fuel duty revenues start to decline more sharply with the rise of electric and other alternatively fuelled vehicles. Treasury officials might want to start thinking about how the Government approaches such a scenario considering fuel duty normally generates around £27bn a year.”