Mitigating rising fuel costs: fair alternatives to cutting fuel duty

Cutting fuel duty in response to the US-Iran conflict would not support the majority of UK households.

Following the recent surge in global oil prices driven by the ongoing US–Iran conflict, new proposals have been set out to protect UK households from rising costs at the pump, without resorting to the fuel duty cuts pushed by Reform UK.

RAC Fuel Watch shows that the average unleaded petrol now stands at 139p per litre, increasing by 7.4p since the start of the conflict while diesel has increased by 16p to 155.1p per litre.

However, delaying the reversal of the 5p fuel duty cut would represent a regressive and costly policy, disproportionately benefiting higher-income drivers who tend to own larger and more expensive cars. Research shows large cars consume around 20% more fuel than medium-sized family cars and that wealthier households tend to drive further distances meaning they gain the most from fuel duty cuts.

Postponing the planned duty increase would cost the Treasury £2.2 billion per year, while doing little to support those on low incomes most affected by rising fuel prices. It would also do little to reduce the UK’s dependence on oil imports which totalled £43billion in 2025 leaving households vulnerable to future price shocks.

To deliver fair, sustainable support, a package of targeted national measures has been proposed as a credible alternative:

• Electric Vehicle Social Leasing Scheme: A tailored EV leasing programme for lower-income drivers who rely on their cars for work and daily life—up to 230,000 leases annually could be delivered for the same cost as maintaining the 5p fuel duty cut.

• Cycle to Work Grants: Introducing public grants to subsidise the upfront cost of bikes and e-bikes targeted at those on lower incomes who currently benefit less from the cycle to work scheme. 4.4 million £500 bike grants or 1.5 million £1,500 e-cargo bike grants could be provided annually instead of a fuel duty cut.
  
  

• Salary Sacrifice Public Transport Travel Cards: Based on the successful Cycle to Work model, employees could buy local public transport season tickets via pre-tax salary deductions—saving 30–40% on commuting costs. Estimated cost: £390 million a year, roughly one-fifth of a fuel duty freeze.
  

• Reinstating the £2 bus fare cap, 3 billion single tickets could be subsidised instead of a 5p fuel duty freeze.
  
  

• Targeted Payments for the Vulnerable: Direct support for small businesses, sole traders and low-income households, ensuring help reaches those most exposed to energy price rises.
  
  

• HGV Efficiency Measures: Reducing fuel use in the logistics sector through retrofitted aerodynamic devices, efficient tyres, and other proven interventions to limit knock-on price impacts on goods.

“Time and time again, governments have cut fuel duty when prices rise, and time and again it has proved to be a tax giveaway to the wealthy. Instead of freezing fuel duty, the UK should back practical solutions such as affordable EV leasing schemes, which can cut costs for those who need it most while reducing our exposure to volatile fossil fuel markets.” Anna Krajinska, T&E UK Director said.

These measures would offer immediate, targeted relief while maintaining vital public revenues and advancing the UK’s shift to electric cars, vans and trucks and cutting oil demand. Sustaining that transition is key to ending the country’s dependence on imported fossil fuels and exposure to volatile global energy prices, shifting the UK transport system to home grown renewables.