Rishi Sunak Faces Calls to Cut VAT on Fuel as Retailers Defend ‘Necessary’ Pump Price Hikes

Petrol retailers have defended the speed of pump price increases and urged the chancellor to help motorists absorb record bills by cutting VAT on fuel.

The Petrol Retailers’ Association (PRA) spoke up as the cost of filling up hits new heights on a daily basis in the wake of Russia’s invasion of Ukraine.

The action, which has sent oil costs above levels not seen since the summer of 2014, saw Brent crude rise as much as 8% on Wednesday – at one stage to above $113 a barrel – and place even greater pressure on prices ahead.

The average price of petrol reached 151.67p a litre on Tuesday.

Diesel exceeded 1.55p a litre for the first time, also building on record figures of recent weeks.

The PRA, which represents independent operators who account for 65% of UK forecourts, spoke up after campaigners accused the industry of being too quick to pass on higher oil costs as they could not have yet even fed through to refineries.

Howard Cox, founder of FairFuelUK said: “The sickening hold the fuel supply chain has over pump prices is more than perverse, it’s tantamount to being criminal.

“Why is Rishi Sunak, and he knows this full well, not acting to check the uncontrolled profiteering that is damaging the economy, the highest taxed drivers in the world and fuelling inflation.”

FairFuelUK and the PRA, which do not agree on many things, were united though in their call for the chancellor to cut the VAT rate applied to fuel from 20%.

Mr Sunak is due to outline his spring statement to MPs on 23 March, but is facing mounting pressure to act beforehand as businesses and families grapple with rising prices on many fronts – including the looming energy price cap hike.

PRA executive director Gordon Balmer said of the price picture: “Rising fuel prices have put further pressure on margins, and pump price increases are necessary to ensure that forecourt operators can continue serving their communities.”

He said of the bigger picture: “In terms of supply in the UK there is no shortage of fuel at our terminals and refineries, and we do not expect any significant disruption.

“In recent years, Russian crude oil and liquid natural gas has accounted for just 10% of imports to the UK.

“Norway and the United States combined supply the UK with nearly 25 million tonnes of crude oil and liquid natural gas while Russia has been supplying the UK with under 4 million tonnes.

“However, as Russia is the third largest supplier of crude oil in the world any disruption of supply feeds through into the internationally traded price of oil, which is also subject to exchange rate pressure as oil is traded in US$.”

Fuel spokesman for the RAC motoring group, Simon Williams, warned drivers: “The sudden $10 jump in the oil price on Tuesday to $113 a barrel is likely to take the average price of petrol towards 155p a litre and diesel to 160p.”

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Rishi Sunak faces calls to cut VAT on fuel as retailers defend ‘necessary’ pump price hikes