Starmer’s cost-of-living adviser calls for fuel duty cut extension

The Labour Party’s cost-of-living advisor has urged the government to prolong the current fuel tax reduction, citing recent petrol price increases linked to the US and Israel’s conflict with Iran. Lord Walker, a Labour peer and leader of Iceland supermarkets, advocated for maintaining the 5p per litre cut beyond September, when it is set to expire after four years of implementation.

“I think given where we are, we do need to be thinking and talking about extending it or enlarging it,” Walker stated during an interview on BBC Radio 4’s Today programme. He highlighted the need for further measures to address the ongoing energy challenges.

Context of the Crisis

The reduced fuel tax was initially introduced by the previous Conservative administration in 2022 to counter rising prices following Russia’s invasion of Ukraine. Now, oil costs have surged again due to Iran’s disruption of the Strait of Hormuz, a critical shipping route for a fifth of global oil and gas traffic.

International Measures

Other nations have adopted varied strategies to tackle the energy crisis. Ireland has lowered petrol and diesel taxes, while Australia has temporarily halved fuel duty for three months. Slovenia became the first EU country to implement fuel rationing. Meanwhile, Egypt instructed businesses to reduce energy consumption by closing earlier.

Labour’s Response

Labour’s Sir Keir Starmer has acknowledged the need to reassess the planned fuel tax increase, stating it would be “under review” amid the Middle East tensions. An energy cap, limiting gas and electricity prices, was introduced in April, but forecasts suggest bills will rise sharply in July due to higher oil costs.

Political Calls for Action

Walker is among the latest figures to push for extending the fuel duty cut past September. Some Labour MPs have privately questioned Starmer’s stance on the tax hike, while opposition parties have demanded more support to mitigate the price surge. The Conservatives, Reform UK, and the Lib Dems argue the war in Iran justifies keeping the cut in place.

Conservative leader Kemi Badenoch predicted Starmer would face “another humiliating U-turn” if the tax increase proceeds. Reform’s Robert Jenrick called for a three-month VAT cut on petrol. The Green Party proposed plans to cover potential bill rises of up to £300 per household. Meanwhile, the SNP advocated devolving energy policy to Scotland, claiming independence could lower costs. Plaid Cymru emphasized renewable energy investment as a long-term solution to price hikes.

Chancellor Rachel Reeves reiterated that any additional support would focus on “those who need it most,” stressing the government’s plan for a volatile world. A Treasury spokesperson noted: “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, and we’re enabling targeted support for those facing higher heating oil costs. We’re also acting to protect people from unfair price rises and to bring down food prices at the till.”