The ongoing impact of high fuel costs has led the AA to demand a 6p per litre cut to pump prices at the upcoming Budget.
With conflicts in the Middle East and Ukraine leading to record-breaking fuel prices, the AA says Chancellor John Healey needs to take direct action.
It wants the Budget later this month to maintain the existing 5p per litre reduction in fuel duty, which was due to expire in September 2026. This cut was postponed, but the AA aims to see it protected further.
The motoring organisation also wants the government to introduce an additional 5p per litre cut in fuel duty, due to the exceptional circumstances facing motorists at present.
Further fuel price cuts needed, says AA
Combining the two reductions in fuel duty should equate to a 6p per litre saving at the pumps for motorists, once VAT is taken into account.
When filling the 55-litre fuel tank of a typical family SUV, the result would be a saving of £3.30.
Should the postponed 5p per litre reduction be allowed to lapse, and no further action taken, the same SUV driver could end up paying £6.60 more to fill up.
The AA has pointed to the increased revenue the Treasury received from VAT during the first six months of 2026, due to the increase in the underlying price of petrol and diesel.
In fact, the AA’s calculations suggest the Treasury has made an extra £374 million in VAT from consumer spending on the buying and maintaining of cars in the first six months of this year, compared with the period from January to June last year.
An issue for more than just motorists
Edmund King, AA president, said: “Drivers need the Chancellor to put the brakes on rising fuel costs. The first step must be keeping the existing 5p fuel duty cut, but with prices rising we believe the Chancellor should go further and cut another 5p.
“Fuel prices aren’t just an issue for motorists. Higher prices increase the cost of moving goods, making deliveries and running businesses, with those costs ultimately finding their way into household bills.
“As underlying fuel prices rise, the Treasury also receives more VAT. We believe the Chancellor should take that additional revenue into account and use the Budget to give drivers and businesses some breathing space.”
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