£22 Billion Budget Shortfall: Labour’s Potential Fuel Duty Hike to Hit Drivers’ Pockets

A Labour government might raise fuel duty to address a £22 billion budget shortfall.

How a Labour Government Could Increase Fuel Costs for Drivers

Drivers might face higher costs under a Labour government as fuel duty could increase to help cover a £22 billion budget gap. The AA is worried that Labour might end the 14-year freeze on fuel duty which could lead to higher costs if the 5p per litre cut from March 2022 is removed. Former Chancellor Jeremy Hunt had extended this cut for another year, but Labour’s plans for managing finances could result in a big increase in fuel taxes to raise about £2.5 billion in 2025-26.

Rising fuel duty would add to the financial burden on drivers who are already dealing with high fuel prices and car insurance costs. The AA reports that petrol prices have stayed high because of increased oil costs and a weak pound. The Competition and Markets Authority says that weak competition among supermarkets has pushed up fuel prices even more. On top of this, Labour’s push for net zero adds more costs with fines and penalties for drivers who can’t yet switch to cheaper greener options, according to the report of Telegraph.

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(photo: Birmingham Live)

Tough Decisions Ahead for Managing £22 Billion Budget Shortfall

With a £22 billion budget shortfall, Labour has hard choices ahead for managing public finances. Though Labour has promised to tackle high car insurance costs, it may be reluctant to change the £8.1 billion tax on insurance policies. The Treasury has warned that the upcoming Budget will involve tough decisions on spending and taxes due to the financial issues left by the previous government.

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