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Business Secretary Kwasi Kwarteng reminds petrol stations to pass on 5p tax cut as diesel prices hit record high



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Petrol stations are coming under pressure to make sure they are passing on tax cuts to drivers.

With the average price of a litre of diesel now at a record high of just over £1.80, and unleaded currently at £1.66, the government has sent a strongly worded letter to fuel retailers to 'remind them of their responsibilities' in ensuring the 5p per litre cut in fuel duty is being reflected in forecourt prices.

With the cost of living continuing to rise - and inflation now at the highest its been in 40 years - the government is under immense pressure to help people manage their escalating outgoings.

Petrol retailers have been told to make sure tax cuts are being passed on. Photo: Stock photo.
Petrol retailers have been told to make sure tax cuts are being passed on. Photo: Stock photo.

In a strongly worded letter being sent this week to petrol giants, business secretary Kwasi Kwarteng says he is reinforcing the government's clear expectation that the 5p fuel duty cut introduced in March's spring statement is a reduction that is passed onto customers.

He writes: "The British people are rightly expressing concern about the pace of the increase in prices at the forecourt, and rightly frustrated that that the Chancellor’s Fuel Duty cut does not appear to have been passed through to forecourt prices in any visible or meaningful way.

"It is also unacceptable that different locations even within the same retail chain have widely different prices."

Kwasi Kwarteng
Kwasi Kwarteng

The RAC has been among the campaign groups and motoring organisations to claim that fuel companies are taking more of a profit now than before the Chancellor's policy was introduced and that the government's 5p tax cut has done little to help ease the pressure on already hard-pressed motorists.

In his letter, Kwasi Kwarteng says he will not hesitate to further involve the Competition and Markets Authority if companies are found to not be passing on the reduction.

He adds: "As you would expect, the Authority has been closely monitoring the situation and will continue to do so. I have been reassured that they will not hesitate to use their powers to act against petrol stations if there is evidence that they are infringing competition or consumer law."

The price of petrol and diesel is leaving drivers and firms struggling to afford to fill their tanks. Photo: iStock.
The price of petrol and diesel is leaving drivers and firms struggling to afford to fill their tanks. Photo: iStock.

But Gordon Balmer, executive director of the Petrol Retailers Association, which represents independent forecourts, said comparing pump prices with wholesale prices 'only gives a partial picture' and that additional expenses such as storage, delivery and higher operating costs are not being taken into account.

He explained: "Five pence per litre did not represent a substantial enough cut to ease the burden of rising prices on motorists.

"While the Chancellor was announcing it, oil prices rose and effectively cancelled out the reduction.

"In addition to this, sales volumes of petrol and diesel are still not back to their pre-pandemic levels.

"Supermarkets and independent fuel retailers are competing vigorously with each other on the thinnest of margins."



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