Rachel Reeves urged to follow European countries and protect consumers amid spiralling fuel prices

The prime minister and chancellor are under pressure to follow European countries and take action to protect consumers from skyrocketing fuel prices after campaigners accused ministers of treating drivers like “the Treasury’s cash cow”.

Oil prices, which have a significant impact on the wholesale cost of fuel, have risen in response to Iran’s crackdown on tankers passing through the Strait of Hormuz, raising pump prices and increasing pressure on the government to abandon a fuel tax increase planned for September.

Chancellor Rachel Reeves announced in her November budget that the fuel duty cut introduced by the Conservative government in March 2022 after the outbreak of the Ukraine war will be extended until the end of August 2026, with rates gradually returning to previous levels over the next five years.

But it now faces growing calls to abandon a fuel duty increase planned for September and instead follow European allies who have taken significant steps to keep prices low as the war continues.

Earlier this month, Greece announced a three-month cap on profit margins on fuel and some supermarket products, while Hungary capped petrol at 595 forints (£1.33) per liter and diesel at 615 forints (£1.37).

Germany, which is considering imposing an unexpected tax on oil companies, will limit gas stations to one price increase per day at 12:00 from April. Companies found to have violated the rules will be fined up to 100,000 euros.

William Yarwood, media campaign manager at TaxPayers’ Alliance, said: Independent: “British drivers are being used as a source of money for the Treasury at a time when their funds are at their lowest. As our European neighbors step in to protect their citizens from rising pump prices, the British government is preparing to increase fuel duty for the first time in 15 years. The Chancellor must extend the freeze on fuel duty and commit to removing VAT from fuel duty altogether.”

Howard Cox, founder of the FairFuelUK campaign, also called on the government to intervene, saying: “Dozens of countries around the world, including France, India and Italy, recognize that it makes financial sense to support drivers as pump prices rise uncontrollably.”

He accused the Government of being “committed to backing the 5p increase in the autumn budget” and added: “The Chancellor and any sensible economist in this Treasury must promise to freeze fuel duty for the duration of this Parliament. But – even more beneficial to the economy and small businesses – they must cut fuel duty now, scrap VAT immorally charged on fuel and ensure pump pricing is fair, honest and transparent through its legislative gear PumpWatch regulatory price monitoring body.” must provide.”

Left-wing Labor MP Clive Lewis, a vocal critic of the government, warned that the planned fuel duty increases were “designed for a different moment, not for a crisis where pump prices rise due to war”. he said Independent: “Continuing with the escalator now will project an air of indifference towards drivers, farmers and small businesses who have no part in creating this situation.”

Diesel prices hit their highest level since December 2022 on Monday, reaching 181.2 pence per litre; That’s a 27 percent increase since Israel and the United States began bombing Iran. The average petrol price increased by 14 percent from 132.8 pence to 152 pence per liter over the same period.

The price gap between diesel and petrol reached its highest level since at least 2003 on Sunday, prompting RAC Foundation director Steve Gooding to warn that “White Van Man is pouring in cash just to stay on the road.” The average price of a liter of diesel in the UK rose to 179.9 pence on Sunday, 28.5 pence more than petrol, the RAC said, adding that this disparity was due to oil refineries in the UK being geared towards producing petrol rather than diesel, meaning the country’s diesel supply was more dependent on imports.

DVLA figures show 16.2 million diesel vehicles were licensed in the UK as of the end of last September. This included the vast majority of light goods vehicles such as pickup trucks.

Mr Gooding argued: “Diesel is the lifeblood of millions of small businesses. Whether you drive or not, rising diesel prices will take money out of your pocket, either at the pump or in bills you pay, from calling the plumber to getting home deliveries.”

AA president Edmund King also warned that “the extra rise in diesel prices is disproportionately affecting businesses, deliveries, the service sector and the self-employed” and said they needed “immediate help”.

Sir Keir Starmer told business and military leaders at a meeting in Downing Street on Monday that his priority was to work on a “workable plan” to end the Middle East conflict and reopen the Strait of Hormuz.

Downing Street said the aim of the meeting, which included representatives from energy firms Shell and BP, shipping giant Maersk, marine insurance specialist Lloyd’s of London and banks HSBC and Goldman Sachs, was to discuss how the government and private sector could work together to respond to the situation.

Sir Keir told bosses that dealing with the effects of war needed to be a “joint effort”, adding: “The government cannot do this alone. You cannot do this alone. We will need to work together on this.”

A Cobra meeting is expected to be held on Tuesday where senior ministers will discuss the ongoing economic blow caused by the war. It comes as the International Monetary Fund (IMF), which advises on policy and provides financial aid to member countries, warned that Britain was facing one of the biggest blows of the energy shock and that the country was particularly exposed to the economic effects of the war. It was stated that this was due to the UK’s dependence on gas-fired energy, unlike countries such as France and Spain, which are protected by greater use of nuclear and renewable energy sources.

Ms Reeves and energy minister Ed Miliband attended a virtual meeting of G7 finance and energy ministers and central bank governors on Monday, where they considered ways to respond to the economic blow of the war.

The meeting took place after President Trump said he might “take the oil from Iran” or consider taking control of Kharg Island, the country’s main oil export hub.