Fuel duty cut should be extended or enlarged, Starmer’s cost-of-living tsar says

The UK Government should consider “extending” or “enlarging” the fuel duty cut due to expire in September because of the rise in pump prices, Sir Keir Starmer’s cost-of-living tsar has suggested.

Lord Richard Walker, the executive chairman of Iceland, joined mounting calls for ministers to abandon the fuel duty hike as the conflict in the Middle East and a blockade of the vital Strait of Hormuz oil and gas shipping lane has sent global prices soaring.

Fuel duty is frozen until September, with the rise scheduled for then under review as a result of the high prices, but other countries including Australia have already taken action to reduce the impact of price hikes for drivers.

Lord Walker told BBC Radio 4’s Today programme on Friday: “The 5p fuel duty cut that you allude to is an interesting one. That’s going to expire in September.

“I think given where we are, we do need to be thinking and talking about extending it or enlarging it.

“Interestingly, the Australian government, I was reading, have recently taken 14p per litre cut to their fuel tax. I mean, this cut is 5p.”

Lord Walker was asked about Tory peer Lord Simon Wolfson’s comment that the Treasury must not end up profiting from the Iran war, and could help businesses and consumers by adjusting duty on fuel to help ease immediate cost pressures.

Next chief executive Lord Wolfson last week told the Press Association that the UK Government would be taking higher tax in fuel duty because of the spiking prices, and could “balance the books” by bringing it down to ensure the tax take remains the same.

Labour peer Lord Walker said: “Lord Wolfson is a great guy and very intelligent, and he might have a point there.”

Chancellor Rachel Reeves announced in her November 2025 budget that the 5p-per-litre cut in fuel duty introduced by the Conservative government in March 2022 would only be extended until the end of August, with rates then gradually returning to March 2022 levels over the next five years.

Prime Minister Sir Keir has previously promised to keep a planned rise in fuel duty from September “under review in light of what’s happening in Iran”, and the Government has stepped up efforts to help drivers find the cheapest fuel in their area through a price comparison site.

But opposition parties have called for swifter action and have set out their own plans to lower the price of petrol and home energy bills as households face the prospect of energy bill hikes later this year.

The Conservatives have called for VAT on energy bills to be removed for the next three years, Reform UK has pledged to reduce VAT on fuel, and scrap green levies on energy bills, and the Liberal Democrats have said a 10p cut in fuel duty should be introduced.

Meanwhile, in the face of growing political pressure to increase North Sea drilling amid concerns over energy security, the Times reported that Energy Secretary Ed Miliband is expected to approve the Jackdaw gasfield off the coast of Scotland, although he remains opposed to the Rosebank field.

Motoring services company the RAC said the latest average price of a litre of diesel at UK forecourts was 185.2p, up 30% since the war started on February 28.

Average petrol prices have reached 154.5p per litre, a rise of 16% over the same period.