Jeremy Hunt has refused to commit to maintaining a freeze in fuel duty, saying he would “look at that decision again” in the run-up to next year’s budget.
The Chancellor is unlikely to impose a massive tax hike on motorists in election year, but the state of the public finances may force him to act.
The budget watchdog bases its assessment of the public finances on fuel duty rising at 1p above inflation – even though this has not happened since 2011 – and maintaining the cut would further add to the squeeze on departmental budgets.
On top of the long-standing freeze, a temporary 5p cut in duty was implemented in 2022-23 and rolled over for 2023-24, but from March 23, 2024 it is set to be reversed.
Mr Hunt stressed that was a “temporary relief”.
At the Treasury Select Committee, Labour’s Dame Angela Eagle pointed out that the assumption of annual increases in the fuel duty escalator gave him “half of your fiscal headroom” – the cushion that allows Mr Hunt to meet his target of national debt falling.
Asked if he would apply the fuel duty escalator, he said: “I’m afraid you will have to wait until the spring budget before I’m able to answer that question.”
He said the freeze was “something that is not a permanent measure”.
He added: “I was very pleased we were able to roll it over this year. And we will look at that decision again in the run-up to the spring budget.”
Committee chairwoman Harriett Baldwin questioned whether the next budget would be before March 23 or if the 5p cut would be allowed to lapse.
Mr Hunt said: “I don’t like temporary reliefs. I think it’s something that is permanent and should be described as permanent.
“That is a temporary relief.
“And we will make a decision on that when we have the spring budget, the date for which has not been decided.”