Environment

Environmental campaigners say fuel duty cut is 'putting money in the pockets of oil companies'

A cut to fuel duty in the Spring Statement "makes no sense" for tackling the cost of living crisis or the climate emergency, campaigners have warned.

Hand filling car up with fuel.

The cut to fuel duty will benefit the richest, according to analysis from the New Economics Foundation. Image: Pixabay

Environmental campaigners say a fuel duty cut announced in the chancellor’s Spring Statement is a major blow in the fight against climate change.

Rishi Sunak announced on Wednesday that fuel duty will be slashed by 5p until March 2023 in order to tackle the spiralling costs across the UK.

Leo Murray, director at climate charity Possible said the cut was a setback in the fight against climate change that will “benefit the wealthiest” – who use cars the most. 

Fuel duty is a tax levied on the price of petrol, diesel and other fuels used to power cars and is included in the price car users pay at the pump.

The tax has been repeatedly frozen by the Tory government over the last decade, amounting to “a real terms cut” according to the Green Alliance. It is currently 57.95 pence per litre and has been cut by 5p.

According to analysis by climate website Carbon Brief, the freeze in fuel duty since 2010 means the UK’s CO2 emissions are as much as five per cent higher than they would otherwise have been.

Environmental campaigners have warned the move to make fuel cheaper will incentivise diesel and petrol car use at a time when the government should be encouraging uptake of electric vehicles and greener forms of travel to reduce carbon emissions.

“The fundamental issue [with the fuel duty cut] is that it doesn’t treat a symptom of a much bigger disease, which is our dependence on fossil fuels”, Murray said. 

“The bizzare thing about this is that it’s a subsidy to oil companies already enjoying record profit. Ultimately that public money is going into the pockets of oil companies and Putin, who supplies a fifth of the UK’s diesel,” he added. 

Campaigners have also said that a cut in fuel duty is an inefficient way to tackle the cost of living crisis, given the poorest drive less and own fewer – or no – cars when compared to wealthier groups.

Analysis from the New Economics Foundation shows that only seven per cent of savings from the cut will go to the poorest fifth of households, while a third will go to the richest.

Paul Tuohy, chief executive at the Campaign for Better Transport (CBT) said: “A cut in fuel duty will only serve as a temporary respite for richer drivers and do little to help those on the lowest incomes who may not even own a car.”

According to the CBT, rail fares have risen at a higher rate than fuel costs since 2012, while bus fares have increased 54 per cent over the last decade. If fuel had risen at the same rate, it would cost “well over 200p a litre by now instead of an average of 167p”, the CBT said.

Campaigners say measures to tackle the cost of living crisis should be more targeted and address the climate emergency, rather than exacerbate it.

The Green Alliance suggests a windfall tax on oil companies, a campaign to reduce energy waste and “supercharging” rollout of renewable energy could help mitigate both the cost of living crisis and climate emergency.

Murray, meanwhile, said slashing the cost of public transport – as New Zealand has done – could help the poorest through the cost of living crisis, while the government should also work on rolling out more measures to reduce dependency on fossil fuels.

“Cutting fuel duty is a knee-jerk reaction that makes it harder to stop an energy crisis from happening again and sets us back in the fight against climate change.”

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