The current 5p cut in fuel duty will be extended for another year, the Chancellor has announced.

Revealing his Budget in the House of Commons today, Jeremy Hunt confirmed that the fuel duty cut would remain in place for another year in a move that will cost the Treasury around £5 billion.

Fuel prices rose dramatically following Russia’s invasion of Ukraine, and while they have fallen dramatically since the highs of the invasion, prices rose again by 4p per litre in the last month.

Chancellor Jeremy Hunt started his Budget speech by saying that because the Government is “delivering the Prime Minister’s economic priorities, we can now help families not just with temporary cost-of living-support, but with permanent cuts in taxation”.

Chancellor Jeremy Hunt said he would maintain the 5p cut and freeze fuel duty for a further 12 months.

He said: “The shadow chancellor complained about the freeze on fuel duty and Labour has opposed it at every opportunity. The Labour Mayor of London wants to punish motorists even more with his Ulez plans. But lots of families and sole traders depend on their car. If I did nothing fuel duty would increase by 13% this month.”

Mr Hunt added: “I have as a result decided to maintain the 5p cut and freeze fuel duty for a further 12 months. This will save the average car driver £50 next year and bring total savings since the 5p cut was introduced to around £250.

“Taken together with the alcohol duty freeze, this decision also reduces headline inflation by 0.2 percentage points in 2024-25 allowing us to make faster progress towards the Bank of England’s 2% target.”

Budget 2024: Alcohol Duty freeze

Elsewhere in the Budget, the Chancellor announced alcohol duties will remain frozen until February 2025

The Chancellor told the Commons: “In the autumn statement I froze alcohol duty until August of this year. Without any action today, it would have been due to rise by 3%.”

He said he had listened to representations from MPs about the tax, adding: “So today I have decided to extend the alcohol duty freeze until February 2025. This benefits 38,000 pubs all across the UK – and on top of the £13,000 saving a typical pub will get from the 75% business rates discount I announced in the autumn.

“We value our hospitality industry and we are backing the great British pub.”

Jeremy Hunt said: “Because of the progress we’ve made, because we are delivering the Prime Minister’s economic priorities, we can now help families not just with temporary cost-of-living support, but with permanent cuts in taxation.”

He claimed Conservatives know “lower tax means higher growth. And higher growth means more opportunity, more prosperity and more funding for our precious public services”.