Rachel Reeves has hinted fuel duty will not be cut to help desperate drivers – as she insisted energy bailouts will not go to the ‘wealthy’.
Chaos in the Middle East has sent pump prices soaring to their highest levels in years, with diesel the worst hit.
Fears are mounting of shortages as Iran maintains a blockade on the Strait of Hormuz and Donald Trump swings wildly between saying the war will end soon and threatening escalation.
In an interview on BBC Breakfast, the Chancellor was challenged that a host of other countries had cut VAT and duty at the pumps and that was the quickest way to help Brits.
But Ms Reeves merely stressed she had already frozen fuel duty until September, and warned about levels of Government borrowing.
She also reiterated that a bailout on energy bills is unlikely to come before the Autumn, and will be targeted at those on low incomes. That has led to anger that middle-earners are being forced to subsidise those on benefits again.
‘I’ve managed to get the public finances under control… I do not want to undo the work that we have done to put our public finances on a firmer footing,’ she said.
Asked if the message drivers should take from that was that fuel duty would not be cut, Ms Reeves said: ‘We do have to be careful because every time you borrow more you put upward pressure on inflation, upward pressure on mortgage costs.
‘And you guarantee that taxes end up being higher in the future to pay back any money that you have borrowed to provide support.’
She added: ‘If I promised that I could alleviate every price increase for every person I wouldn’t be telling the truth.’
Trimming 5p off duty on petrol and diesel would cost the Treasury around £2.5billion a year.
Pressed if support could go beyond people who receive benefits, Reeves said: ‘We’re looking at ways in which we can support people based on their household income.’
She added: ‘I want to learn the lessons of the past because when Russia invaded Ukraine, the richest, the best-off third of households got more than a third of the support. That makes no sense at all.’
On the timing, Ms Reeves said: ‘From July to September, gas usage, especially by families and pensioners, is the lowest of any months of the year because it is the summer months.’
The PM is holding a Downing Street press conference this morning to update the country on the Government’s response, after the latest brutal barbs from Donald Trump.
Sir Keir is expected to stress the need for calm and highlight that the energy cap is keeping domestic bills down for the next three months. Business Secretary Peter Kyle toured broadcast studios earlier insisting that there is no sign of fuel shortages, despite alarming rises in pump prices.
However, there are calls within Government to do more to prepare the public for the pain to come.
