How much could the fuel duty freeze cost?published at 13:14 BST

13:14 BST

By Anthony Reuben

Prime Minister Keir Starmer has said the government is not going to go ahead with a planned increase in fuel duty this year.

Chancellor Rachel Reeves announced at last year’s Budget that she would phase in a 5p rise in fuel duty from this September. It would go up by 1p that month, a further 2p in December and another 2p in March 2027.

We now know fuel duty will be frozen until 31 December 2026.

The 5p cut in fuel duty was originally brought in by the last Conservative government in March 2022 and was supposed to be in place for a year. Fuel duty raised £24.3bn last year, external and the Treasury has estimated, external the cost of the 5p cut was about £2.4bn a year.

We estimate that extending the freeze to the end of the year will cost about £240m, although rising fuel prices means the government is getting more revenue from the 20% VAT that is charged on fuel.

Image source, House of Commons

• PM Keir Starmer kicked off this week's PMQs by announcing that the government would be postponing plans to increase fuel duty by 5p due to events in the Middle East
• Conservative leader Kemi Badenoch replied by thanking the prime minister "for the U-turn", before asking why Labour MPs voted yesterday to ban new British oil and gas licences
• Starmer hit back, saying oil and gas would be "important" for years to come, but insisted renewables are the only way to "take control"
• Badenoch then shifted focus to the government's decision to loosen some sanctions on Russian oil products, accusing Starmer of "choosing to buy dirty Russian oil"
• The PM argued that the new sanctions went "well beyond" existing ones and are being phased in in the same way the Conservative government did - before accusing the Tory leader of playing "party politics" on the topic of Ukraine
• Rounding off the back and forth, Badenoch said the PM was "hanging by a thread" and referenced potential leadership challenges from Wes Streeting and Andy Burnham. Starmer failed to address the questions over his leadership, instead outlining the UK’s shorter NHS waiting lists and a fall in inflation, which was announced this morning

Brian Wheeler
Reporting from the House of Commons

A big sigh and a shake of the head from Green MP Hannah Spencer, as the PM answers her question on whether MPs should be allowed to “drink on the job” with an attack on her party leader.

Another Westminster custom the new MP is having to get used to…

Harry Farley
Political correspondent

Labour MPs have been relatively subdued during this PMQs, perhaps unsurprisingly given all the rumpus going on around the party’s future leadership and direction.

But Keir Starmer wins the biggest cheer of the day for his rebuke to the Green MP’s Hannah Spencer’s question about drinking on the parliamentary estate.

"The Greens think their leader walks on water. It turns out he lives on water and doesn't pay his council tax," he says.

It comes after the Green Party admitted Zack Polanski may have failed to pay his council tax for the houseboat he was, until recently, living on.

Spencer’s question is part of a wider campaign she has to oppose the ability of MPs to drink alcohol during the working day in Parliament.

That hasn’t gone down well with many MPs, who argue Parliament’s bars and restaurants are an important place for MPs to relax and they help to foster cross-party working.

One MP anticipated Spencer's question and shouted "anyone for a pint" as she stood up.

Starmer avoided taking a side and ducked the question.

Starmer came prepared to a potentially tricky PMQs with two big announcementspublished at 12:38 BST

12:38 BST

Chris Mason
Political editor

Not putting up fuel duty in the autumn and giving hauliers a 12-month break from road tax is the government’s attempt to address the spiralling cost of fuel because of the war in the Middle East.

It’s part of a wider set of announcements expected today and tomorrow given the fear of wider spiralling prices in the coming months.

The exchanges between Conservative leader Kemi Badenoch and Keir Starmer focused on the intricacies of the sanctions regime imposed on Russia, as some are loosened on Russian oil refined into diesel and jet fuel.

Starmer insisted overall sanctions were getting tougher and the government’s approach today was consistent with what other governments have done and what the previous Conservative government did here.

Badenoch sought to draw a connection between this and the government’s unwillingness to fully exploit the oil and gas in the North Sea. Starmer insisted oil and gas was being taken from the North Sea all day every day and would be for years to come.

Taking a step back, today’s announcements and the ones to come are an indicator of how keenly aware the cost of living pressures already are for millions of families - and how they may still get more difficult.

Davey uses his second question to say Greater Manchester Mayor Andy Burnham and former Health Secretary Wes Streeting, seen as potential leadership challengers to Starmer, have ruled out any support for Britain joining the customs union with the EU in the past few days - despite the fact, he says, that it would "boost growth".

He asks the prime minister if he is relieved to finally have something he can agree with his colleagues on.

Starmer responds by saying he has spent the last two years negotiating "serious" trade deals, including with the EU, India and United States, which are "vital" for important sectors of the economy.

Image source, House of Commons

Next up to speak in the Commons is Lib Dem leader Ed Davey.

He addresses UK and US cuts to international aid programmes amid a dangerous Ebola outbreak in Africa.

Despite this, Davey says, there are rumours that the government is planning further aid cuts - will the prime minister rule this out?

Starmer says the government is committed to overseas aid, which he accepts was cut to increase defence spending. But he says this was "mitigated" by other measures the government put in place.

• For context: An Ebola outbreak in the Democratic Republic of Congo has been declared a public health emergency of international concern, by the World Health Organization (WHO). The latest outbreak is challenging because it involves a rare strain of Ebola for which there is no vaccine.

Brian Wheeler
Reporting from the House of Commons

Kemi Badenoch struggles to be heard over the noise from Labour MPs as she deploys her Labour leadership attack lines.

Starmer’s announcement on fuel duty has taken the heat out of this.

Image source, House of Commons

Badenoch says she is asking Starmer specifically about new oil and gas licences, which she says Labour voted against on Tuesday - accusing the PM of "nationalising steel" and "imposing price controls in the supermarket".

Starmer is "hanging by a thread", she says, with "fake support from his backbenchers".

Labour MPs have been "huddled in the corridors... talking about Burnham and Streeting", Badenoch says, adding that "the worst part is they aren't getting rid of [Starmer] over his terrible agenda" but because "they want a better salesman".

She says it doesn't matter who replaces Starmer, because "the real problem is the Labour Party".

Starmer responds by outlining figures released last week which he says shows the UK has the "fastest growing economy in the G7", and "the biggest fall in waiting lists for 17 years".

He says inflation has also come down "more than expected", but does not address questions over his leadership.

Brian Wheeler
Reporting from the House of Commons

Starmer is getting very vocal support from Deputy PM David Lammy and Foreign Secretary Yvette Cooper, sat on either side of him on the front bench, as Kemi Badenoch accuses him of being patronising.

Wes Streeting shows no emotion as he watches from his new perch on the backbenches.

Image source, House of Commons

Back in the Commons, Badenoch says Starmer's "pompous tone" does not cover the fact his policy is wrong.

She says more people are buying Russian oil because British oil isn't being drilled - adding she can't believe even when he "has nothing to lose" he continues to defend banning new British oil and gas licences.

She then says that in April, there was the single biggest drop in employment ever since the pandemic, asking: "Why is he doing everything to save his job and nothing to save other people's?"

Starmer repeats comments that there is drilling in the North Sea and that the government is supporting existing oil and gas fields through their lifespan, and recently introduced changed to allow neighbouring fields to be exploited.

He reiterates that people are "fed up" with prices going up due to international conflicts and says the last government didn't take control of bills.

While Prime Minister's Questions continue, we have more detail on the postponement of the 5p per litre fuel duty rise that was due to kick in between September and March.

As a reminder, the 5p cut was first introduced in 2022, and has been "frozen" since then.

In a press release, the government now says:

• The "freeze" for drivers will be extended until 31 December
• In addition, the fuel duty rate on red diesel - used by farmers and rail freight - will be cut by over a third from 10.18p to 6.48p per litre from 15 June until the end of the year
• For the haulage sector, there will also be a "a holiday for their HGV VED [vehicle excise duty] for 12 months"
• The government says: "This means when hauliers renew their HVG VED they will pay just £1, saving £600 for a typical heavy lorry and £912 for the HGVs with the highest VED liability"

Image source, House of Commons

Badenoch accuses the prime minister of choosing to buy "dirty Russian oil", which she claims is being used to fund the killing of Ukrainian soldiers.

Starmer replies by saying Badenoch is misunderstanding and misrepresenting what he is saying, and repeats that these are new sanctions that are being introduced and similar methods are being used by other countries.

The prime minister accuses the opposition leader of playing "party politics" on the topic of Ukraine, adding that the only person who benefits from British politicians doing so is Vladimir Putin.

Image source, House of Commons

Next, Badenoch says Starmer "doesn't know what he is talking about" and accuses Labour of giving money to Russia, while Reform takes money from Moscow.

"There's only one party that's standing up to Russia and that is the Conservative Party," she says, to cheers from her benches.

In March, when the US eased sanctions on Russia, Starmer said partners should maintain pressure on Vladimir Putin, Badenoch continues, before asking: "What has changed since then?"

Starmer repeats that the new licences on Russian oil is part of a new package of sanctions. "None of the existing sanctions are being lifted in any way," he stresses, adding that pressure on Russia is only increasing.

"Similar methods are used by other countries," he adds, explaining that they are used to protect the market and UK consumers.

Image source, House of Commons

Badenoch says the UK is "losing a thousand jobs a month in oil and gas" and turns to the to government's decision to loosen some sanctions on Russian oil products.

She asks the PM to explain why "oil from Russia is acceptable, but oil from Aberdeen is not".

Starmer says the sanctions announced yesterday were a "new package" of sanctions that went "well beyond existing sanctions".

He says two "short-term licences" were issued to phase the new sanctions in, which he says is how the both his government and the previous Conservative and done so previously, adding: "It's not a question of lifting existing sanctions in any way whatsoever."

• For context: The UK government has loosened strict sanctions on Russian oil refined into diesel and jet fuel in third countries as prices rise. The waiver begins on Wednesday and reflects growing supply concerns over certain fuels due to the effective blockade of the key Strait of Hormuz waterway since the start of the US-Israel war with Iran.

Image source, House of Commons

Keir Starmer responds on fuel duty, first, saying Labour inherited plans from the Conservatives for fuel duty to go up 5% in April.

"We stopped that and they voted against it," he says repeating that Labour is extending the freeze due to events in the Middle East.

On oil and gas, he says it will be "important" for years to come.

The PM adds that families are "fed up" of bills going up and down - adding the only way to "take control" is with renewables.

Image source, House of Commons

Kemi Badenoch is up and begins her first question to the prime minister by saying she welcomes "some" of what the prime minister has said on fuel duty.

She then says her party, the Conservatives, asked him about the topic in March, adding: "Thank you for the U-turn."

Badenoch then asks why Labour MPs voted yesterday to ban new British oil and gas licences.

Starmer now gives more detail on extending the fuel duty freeze "for the rest of the year".

Fuel duty was initially cut by 5p in the Spring Statement in March 2022, under the Conservative government. It was supposed to last 12 months, but has been repeatedly extended.

It was due to rise by 5p between September this year and March 2027.

Starmer says he's extending the freeze because of events in the Middle East.

The decision follows reports that the average price of petrol hit its highest level since the start of the Iran war on Monday - reaching 158.52p a litre, according to the RAC.

Ahead of questions from Conservative leader Kemi Badenoch, the PM says he's extending a "fuel duty freeze" for the rest of the year.

We'll have more in our next post.

Brian Wheeler
Reporting from the House of Commons

Former Health Secretary Wes Streeting is on Labour’s backbenches for PMQs, following his resignation last week.

I can see him chatting to his new backbench colleagues.