Chancellor Rachel Reeves is confronting intensifying demands to abandon planned fuel duty increases as British motorists endure pump price surges triggered by the Iran conflict, with even the Prime Minister’s own cost of living champion adding his voice to calls for policy reversal.
Lord Richard Walker, chairman of Iceland supermarkets and Sir Keir Starmer’s appointed “cost of living tsar,” urged the Government on Friday to extend or expand the temporary 5p fuel duty cut scheduled to expire in September, citing Australian action that slashed fuel taxes by 14p per litre as a model worth considering.
“I think given where we are, we do need to be thinking and talking about extending it or enlarging it,” Lord Walker told BBC Radio 4’s Today programme, highlighting the disparity between Britain’s modest relief measures and more aggressive international responses to Middle Eastern petroleum price volatility.
Ms Reeves announced during last year’s Budget that the 5p reduction introduced in 2022 following Russia’s Ukraine invasion would be unwound progressively between September 2026 and March 2027, ending a fuel duty freeze maintained since 2011.
However, RAC data reveals diesel prices have climbed 30 per cent to 185.2p per litre since hostilities commenced on 28 February, whilst petrol reached 154.5p—a 16 per cent increase over identical timeframes—generating cross-party consensus that the planned duty restoration requires reconsideration.
Lord Walker endorsed observations from Conservative peer Lord Wolfson, the Next chief executive, who argued the Treasury risks profiting from the Iran war through higher tax receipts generated by elevated fuel prices, suggesting duty reductions could “balance the books” by maintaining constant tax intake despite volume fluctuations.
“Lord Wolfson is a great guy and very intelligent, and he might have a point there,” the Labour peer acknowledged.
Sir Keir has pledged to keep September’s duty rise “under review in light of what’s happening in Iran,” whilst the Government launched initiatives helping motorists locate cheaper fuel through comparison websites.
Opposition parties have outlined more aggressive interventions: Conservatives propose removing VAT from energy bills for three years, Reform UK advocates fuel VAT reductions alongside green levy abolition, and Liberal Democrats demand immediate 10p fuel duty cuts.
A Treasury spokesperson defended current policy: “We have the right economic plan for a more volatile world, taking a responsible approach to supporting working people in the national interest. Fuel duty is frozen until September.”
The 45-year-old Lord Walker—son of Iceland founder Malcolm Walker—previously rated Sir Keir’s Government performance a lukewarm “six out of ten” and criticised Ms Reeves’ business tax increases before receiving his February appointment and subsequent life peerage, despite having switched allegiance from Conservatives to Labour in 2023.
The businessman previously harboured parliamentary ambitions within Conservative ranks and has expressed personal prime ministerial aspirations.
