Labour U-turn over fuel duty hike branded ‘too little, too late’ as Chancellor Rachel Reeves clashes with angry white van man amid new figures showing she’s raked in £500million VAT windfall thanks to sky-high pump prices

Chancellor Rachel Reeves clashed with an irate driver today; Labour’s latest U-turn to deactivate the fuel tax has been branded ‘too little, too late’ as it delays the crackdown on motorists by just a few months.

After weeks of mounting pressure, Sir Keir Starmer announced that ministers will postpone their planned 5p per liter fuel increase at Prime Minister’s Questions.

But despite Ms Reeves’ £500 million VAT windfall thanks to sky-high pump prices caused by the Iran war, the transaction has only been delayed from September until the end of 2026.

This means drivers face a congestion in the New Year, just as energy bills rise for homes to keep warm during the winter months.

Embarrassingly for Ms Reeves, she was rammed by an angry white van driver during a photo shoot to promote the announcement on a forecourt in Leeds today.

He was interrupted during a broadcast interview by the man who shouted that the Government was ‘ruining the country’ and ‘putting Keir Starmer out’.

The bloke appeared to be a UK Reform supporter and shouted: ‘Nigel Farage. ‘Go on, Nigel.’

A man driving a white van was seen cornering Rachel Reeves in the forecourt in Leeds where she was promoting the announcement.

Chancellor Rachel Reeves was heckled by a white minibus driver as she promoted her announcement on a forecourt in Leeds.

As he drove his car with two St George flags on its roof, he said out the window: ‘I have British flags. Will I be arrested? There are British flags here, Rachel, will I be arrested?’

But he fought back and said: ‘I love our country. I love our country and one of the characteristics of our country is etiquette. Not very British.’

It comes as analysis by the RAC Foundation showed skyrocketing pump prices are collectively costing motorists an extra £3bn.

This netted Ms Reeves an extra £500 million in VAT receipts, as higher prices mean the 20 per cent tax corresponds to a larger share of the tax going to the Treasury coffers.

Dozens of countries cut fuel taxes weeks ago to help struggling motorists after the Strait of Hormuz was blockaded and oil prices soared.

But Labor dragged its feet after facing calls to cancel its pay rises in early March following the outbreak of war on 28 February.

This happened as average gasoline prices rose to today’s highest level since December 2022 (158.5 pa per liter), after a brief decline.

Sir Ed Davey, leader of the Liberal Democrats, who called for a 10p per liter cut in tax, said: ‘Today’s proposals are a classic example of ‘too little, too late’ from an indecisive government in crisis. Reeves is completely disconnected.

Despite ‘Downing Street’ [leadership contest] obsession with psychodrama, the rest of the country is still suffering from the ever-increasing cost of living.’

Sir Mel Stride, the Tory shadow chancellor, said: ‘Labour’s fuel tax increase would hurt businesses and hit hard-working families already stretched to breaking point.

‘I have been calling on Reeves for months to cancel the fuel tax increase.

‘After pressure from conservatives, Reeves was eventually forced into a U-turn.

‘Fuel duty was frozen or cut for 14 consecutive years under the Conservatives. Labor wanted to put up with this during the cost of living crisis.

‘That tells you everything. Families cannot afford the workforce.’

Conservative Party shadow chancellor Sir Mel Stride says ‘families can’t afford the workforce’

Since the Iran war caused pump prices to rise, filling up the average 55-litre tank in a family car with petrol has risen by around £14 and for diesel by over £24.

Fuel duty was previously planned to increase by 1 pence per liter on September 1, with an increase of 2 pence per liter on December 1 this year and March 1 next year.

This would reverse the 5p per liter cut first imposed by the Conservatives in March 2022 amid rising pump prices caused by Russia’s invasion of Ukraine. It is currently 52.95 pa per liter; This means that tax accounts for approximately half of the cost of refueling when VAT is included.

Treasury sources said ministers will keep the situation ‘under review’ and will announce in the Autumn Budget whether the increase will start from January 1 next year or be postponed again.

Sir Keir also said hauliers will receive a ’12-month road tax holiday’ from July 1 in a bid to keep the cost of goods on supermarket shelves low, as higher diesel prices are often passed on to consumers.

The Treasury said they would pay £1 on annual renewals, saving £600 for a typical heavy truck and £912 for the largest vehicles on the road.

Farmers, rail transport and other users of red diesel will also see fuel duties cut as part of an effort to reduce the cost of goods on supermarket shelves.

The rate will be reduced from 10.18 pence per liter to 6.48 pence per liter from 15 June until the end of the year.

Downing Street estimates the package of measures will cost £455 million.

Since the Iran war caused pump prices to soar, filling up the average 55-litre tank in a family car with petrol has risen by around £14 and for diesel by over £24.

The average family fills up twice a month, meaning around £336 and £576 are added to their annual fuel bill respectively.

While pump prices have fallen slightly in recent weeks, petrol is on average 25p more expensive per liter than before the conflict, while diesel is 40p more expensive.

Sir Keir said: ‘I know many people are feeling the pressure of energy and fuel costs and are concerned about how the conflict in Iran will affect their finances.

‘Because when global events increase prices, employees are the first to feel it.

‘That’s why this government is stepping in to keep fuel costs down for millions of motorists and put money back into the pockets of working people.’

Ms Reeves said: ‘I keep taxes low for drivers and businesses; I’m putting money in the pockets of millions of workers and reducing costs for farmers and carriers.

‘The war in Iran is driving up fuel prices in our country, but after strong growth at the start of the year, I’m stepping in to protect people at the pump.’