Fuel and alcohol prices tipped to rise

The Government is reportedly poised to end the eight-year freeze on fuel duty in order to boost spending on the NHS.

An inflation-linked increase in fuel prices would raise an extra £800m for Treasury coffers next year and would be used to help pay for Theresa May’s promised £20bn a year increase in funding for the health service, says The Guardian.

Ministers are also understood to be considering lifting the freeze on alcohol duty announced in last autumn’s Budget, which would bring in at least another £200m each year in additional funding.  

Senior government sources told the newspaper that the plan was “under serious consideration” as a means to ease pressure on public finances.

“If they don’t [lift the freeze], the deficit hole will get even bigger,” said Carl Emmerson of the Institute for Fiscal Studies. “The challenge of finding the money for the NHS, keeping the public finances on the track the Chancellor might want, would all be harder if you continued freezing it.”

Environment campaigners are expected to support the lifting of the fuel duty freeze, which they claim has contributed to the increase in toxic pollution. According to former government transport advisor Professor David Begg, freezing duty had reduced fuel prices by 13%, resulting in a 4% increase in traffic that has caused an extra 4.5 million tonnes of carbon dioxide emissions.

On the other side of the argument, Tory MP Robert Halfon is among those campaigning for the freeze to continue, claiming that raising fuel duty would  “hit hard-working White Van men and women”.

“Get more money for the NHS by cutting overseas aid rather than making life harder for struggling families,” the former education minister said.