Reversing the 5p increase on fuel duty would be a “costly and regressive move” that fails to support households, according to a letter to the Chancellor of the Exchequer.
Transport & Environment alongside Clean Cities, EVA England, Electric Vehicles UK, REA Transform Scotland, Centre for London, Mums for Lungs, said it was a “regressive tax break” that “does little to reduce oil dependence or protect those most exposed to rising prices”.
It calls instead for targeted support through a social leasing scheme to bring EV costs down to as little as £77 per month for lower-income households.
For the same cost as maintaining the 5p cut, this approach could support around 230,000 households each year, cutting bills while accelerating the transition to clean transport.
It said that through a social leasing model, the UK Government could tackle one of the “biggest barriers to EV uptake” and support the UK automotive industry, boosting demand. In addition, it would deliver emissions reductions of up to 9% on current domestic transport levels by 2034.
The news comes as the Prime Minister Keir Starmer announced an extension to the 5p cut in fuel duty, originally introduced in 2022 by the-then PM Rishi Sunak to alleviate costs following the Ukraine War.
Chancellor Rachel Reeves had previously said that the cut would be axed from September this year, but it has now been extended for the remainder of the year, at a cost of around £400m to the Treasury.
Anna Krajinska, T&E UK Director said, said:
“For the same cost as a fuel duty cut, ministers could support over 200,000 lower-income households into affordable electric cars -cutting bills, boosting energy security, and delivering lasting climate benefits.
“This is a clear choice: a blunt tax cut that props up oil dependence and delivers the greatest benefit to the wealthiest , or a targeted scheme that helps families escape petrol-price volatility for good while accelerating the shift to cleaner transport.”
It comes as the trade group ChargeUK highlighted how the 5p freeze was occurring at the same time that the UK Government was fighting a legal ruling on reducing public charging VAT.
Jarrod Birch, head of policy and public affairs, ChargeUK said:
“As petrol prices have surged, charging an EV on the public networks has become marginally cheaper than fossil fuels. But unlike the war in Iran, the cost of public EV charging is largely within government’s control.
“There are now more than two million EV drivers in the UK – a considerable constituency of people whose cost of living counts too. There could be millions more if public EV charging was made affordable for all. Extending the fuel duty freeze without urgent action to address the policy costs pushing up public EV charging prices is unjust and unsound.”
Image courtesy of Green Car Guide
