Liberal Democrat leader Sir Ed Davey has officially called on the government to enact an immediate 10p per litre cut to fuel duty. This temporary measure, proposed to remain in place until Christmas, is part of a broader package of policies aimed at addressing the ongoing cost-of-living crisis. Additionally, Sir Ed is urging ministers to scrap a permanent increase in fuel duty that is currently scheduled to take effect in January.
The Liberal Democrats estimate that a 10p reduction in fuel duty would result in a 12p per litre decrease for drivers at the pump. Sir Ed argued that supporting motorists is essential and suggested that the three-month policy would essentially pay for itself by stimulating the economy. Regarding the funding of the £2bn proposal, he stated, "It's a three-month package, a temporary package, but if you look at the extra money the government will get through the energy profits levy, from gas taxes, from VAT and fuel duty, it's self-funding."
Sir Ed linked the current price pressures to international conflict, noting, "Petrol and diesel prices are higher than they've been for a long time because of Trump's mad war with Iran, and people need help now."
Fuel duty has remained frozen since March 2022 under the previous Conservative administration. The current Labour government has maintained this freeze, having decided in May to delay a planned 3p increase from September until the end of this year. As Chancellor John Healey faces pressure to manage government borrowing through potential tax increases or spending cuts in next month's Budget, the government has responded cautiously to the Liberal Democrat proposal.
Labour Party chair Bridget Phillipson, when asked about the call, remarked that she was certain the Chancellor would be open to suggestions ahead of the Budget. She added, "Whilst I recognise what the Lib Dems have to say on this topic, this is the element of politics about it – they've got their conference, they're making their pitch, good luck to them."
In a scheduled speech at his party's conference on Tuesday, Sir Ed is expected to outline further economic proposals, including a reduction in rail fares by 10% and a cut to the bus fare cap from £3 to £1. He also intends to advocate for the removal of VAT from public electric vehicle charging points and a formal review of network costs, which the Liberal Democrats have described as unfair.
