Rishi Sunak urged to cut fuel duty and raise mileage recovery rates as petrol prices soar

Jake Berry, who chairs the Northern Research Group of Tory MPs, called for the Chancellor to act ahead of Mr Sunak's Spring Statement next week.

Mr Berry said that in addition to a fuel duty cut, the Government should also be looking to adjust mileage allowance payments for workers on business journeys from the current rate of 45p per mile up to 60p.

Mr Sunak said he would consider the suggestion but highlighted the current volatility of prices.

Mr Berry said: "With the cost of fuel now being an eye-watering £2 a litre in some areas, it’s led to a huge VAT windfall for the Treasury.

"When the Chancellor thinks about his spring statement coming up, will he not only look at cutting fuel duty, but also look at mileage recovery rates. They have been at 45 pence per mile for over a decade, now is the time to put them up to 60 at least."

Mr Sunak replied: "I’m grateful for his suggestions, of course I’ll bear them in mind. He’s right about the rising cost of fuel at the pumps, although I am pleased to see that over the last few days the price of Brent has fallen by about 25 per cent, just illustrating the volatility of the situation (we’re) currently experiencing."

The discussion in Parliament came as the RAC said filling up an average family car now costs more than £90 for the first time.

According to the motoring organisation’s ‘Fuel Watch’, the price of a litre of petrol reached a new high of 163.71p on Monday, meaning that filling a 55-litre tank of a typical family car – such as a Volkswagen Golf or Audi A3 – will now cost £90.04.

Prices for diesel also reached a new high point yesterday, costing an average of 173.68p per litre, which means that filling a 55-litre family car will sting people to the tune of £95.52.

Prices of petrol and diesel have risen as a result of the ongoing conflict in Ukraine, with oil prices soaring when Russia invaded. Since then, fuel has consistently gone up in price by a few pence per litre per day.

However, in recent days the price of oil and the wholesale cost has dropped, with the RAC saying that it’s “vital” that these savings are now passed on to motorists.

RAC fuel spokesman Simon Williams said: “Drivers should be encouraged by oil and wholesale prices dropping again yesterday. It’s now vital that the biggest retailers who buy fuel most often start to reflect these reductions at the pumps to give drivers a much-needed break from the pain of constantly rising prices.”

The Petrol Retailers’ Association (PRA), which represents around two-thirds of the UK’s forecourts, wrote to Mr Sunak yesterday urging the government to cut fuel duty to ‘reduce the burden of soaring energy costs and fuel prices on consumers and businesses’.

The PRA said many of its members ‘have done what they can to alleviate the increases’ but that many had been left with ‘negative fuel margins’.

Gordon Balmer, PRA executive director, said: “The PRA urges the government to follow the example of Ireland in cutting fuel duty to reduce the burden of soaring fuel costs. The government is well positioned to implement this measure, as the high cost of fuel has seen VAT revenue increase, which would help mitigate the cost of cutting fuel duty.”

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