Raising fuel duty would be a declaration of war on Britain’s motorists – Rishi Sunak must think again

WITH National Insurance contributions about to be raided, Universal Credit cut by £20 a week and soaring inflation, wallets and wages are getting well and truly hammered.

Add to that the increases in energy prices and oil smashing past $80 a barrel and any increase in fuel duty would be political suicide and economically reckless.

Not only is there a cost of living crisis, we now have a cost of filling crisis.

Chancellor Rishi Sunak is the golden boy of the Tory party right now but a declaration of war on Britain’s motorists would end that in a single Budget blunder.

Here’s the thing: There is no need to even consider any Budget targeting our chronically denigrated drivers, who are already the highest taxed in the world. It’s as simple as that, Mr Sunak.

All facets of our daily existence are adversely squeezed by the price of fuel. Jobs, medical needs, the economy, inflation, business investment and freedom of movement depend on the cost-effective delivery of the fuel we use.

With pump prices at their highest for nearly a decade, it would be a huge betrayal of those who gave the Government their huge majority.

Next Wednesday, Mr Sunak will reveal the Government’s fiscal direction of travel and how much the Covid abyss of debt will cost us all. It will be colossal. Not one of us will be able to avoid the Treasury’s smash and grab.

Unbelievably, my contacts say there are people inside the Treasury telling the Chancellor the public will stomach a big rise in fuel duty, especially in the lead-up to the COP26 climate change conference.

But anyone whispering in his ear, “We can get away with it this time”, is utterly clueless. Ask for your money back from any pollster or focus group telling you that.

A punitive rise in fuel duty does nothing to help climate change — the trends towards fuel economy and the ill-judged 2030 cliff-edge replacement of fossil fuel-based vehicles by greener alternatives are already established.

Transport Secretary Grant Shapps is forcing us all into one fuel type of vehicle when a plethora of new clean-fuel technologies should dictate what we drive, not an ill-informed Government edict.

What’s more, a rise in fuel tax will penalise poorer families, who are forced to spend far more of their income on fuel than well-off households.

It will also hit those who live outside our major cities, with little access to other means of transport.

Londoners, including a lot of those well-heeled Treasury officials, have access to a sophisticated public transport network and spend half as much on fuel as those who live elsewhere.

It is a sobering fact that 92 per cent of all fuel duty is paid by non-Londoners.

In next Wednesday’s budget, Rishi Sunak will reveal the Government’s fiscal direction of travel and how much the Covid abyss of debt will cost us all

The Centre for Economics and Business Research (CEBR) found, in a study for Fair Fuel UK, that London-based drivers pay a third less of their income than motorists in Northern Ireland. Wales, the Midlands and the North also pay twice as much as drivers in the capital.

Any increase in fuel duty will be devastating to these regions — home to many of those “Red Wall” former Labour strongholds newly converted to Tory.

Increasing fuel duty will damage the economy and add to inflation. A year ago, we calculated with the CEBR that a 2p rise would negatively hit GDP by £600million and raise inflation by 0.6 per cent.

The suggested 5p rise would cut GDP by £1.4billion and push inflation up by as much as 1.5 per cent.

At a time when rising inflation threatens to tip the economy into recession, adding to this risk through a rise in the cost of filling up would be idiotic.

The clever solution would be to cut the hated tax, rather than freeze it.

The Treasury knows cutting fuel duty stimulates the economy. It has even proved it. A Treasury report published in 2014 said: “The dynamic modelling suggests reductions in duty will increase GDP by between 0.3 and 0.5 per cent in the long term, with increased profits, wages and consumption adding to higher tax revenues.”

In other words, cutting fuel duty is an economic stimulus.

Prime Minister Boris Johnson is calling for a well-paid, highly skilled workforce — and he expects the private sector to make it happen.

There are no signs of traditional Conservative tax incentives to help businesses and consumers in making this a reality.

But it is not too late for the Chancellor. The pragmatic way forward is to encourage consumers and businesses to spend and spend, by announcing a significant reduction in fuel duty.

A big cut will let hauliers on wafer-thin margins invest in new HGV drivers, training and cleaner road stock. That would help prevent the recent chaos in logistics and fuel supply from becoming regular occurrences.

Rishi, do this tax-cut double — then sit back and watch the revenue flood into the Treasury as GDP flourishes and the national debt grinds down.

Put money back into all our wallets and the Conservatives will be in power for a generation.

You know it makes fiscal sense, Rishi.