Ahead of Ed Davey’s conference speech, the Liberal Democrats launched their cost-of-transport campaign. With households facing higher costs from the conflict in Iran, the party wants an emergency three-month package: a 10p cut in fuel duty, cheaper rail and bus fares, and lower EV charging costs. The bill is around £2 billion, funded from the extra revenue higher fuel prices generate.
There is a clear case for helping people through a sudden shock. But a party that has long argued for tackling climate change should ask a bigger question: are fuel-duty cuts really the best way to help people in the long term?
Britain has a familiar pattern. Prices rise. Households feel it. Government makes fossil fuels cheaper. Billions are spent, the pressure eases, and a few months or years later we are back in the same place.
None of it changes the underlying vulnerability. We remain exposed to international oil markets, and transport costs feed straight into the cost of living. A fuel-duty cut provides relief. It doesn’t reduce our dependence on oil, the majority of which is imported.
Fuel-duty cuts are also poorly targeted. The more fuel you use, the more you save, so someone driving a large, inefficient SUV gains more than someone in a smaller family car. That is hard to square with directing scarce public money at the households who need it most.
The OBR estimates successive fuel-duty freezes cost the Treasury around £120 billion since 2010-11. That money could have gone into transport infrastructure, clean energy and the industries underpinning Britain’s future prosperity.
Measures designed around petrol and diesel also distract from a transition well under way. In August, battery electric vehicles took 30% of new car registrations, up almost a third year to date. That’s more than petrol and diesel cars combined. The system is changing now, and policy should help people take part rather than making it cheaper to stay dependent on fossil fuels.
If £2 billion is available, there are better uses for it. A targeted used-car offer could help households scrap a polluting older vehicle and move into a cleaner electric alternative. EVs are cheaper to run and produce no tailpipe emissions, so wider access cuts both exposure to oil-price shocks and air pollution.
If we answer every price shock by subsidising petrol and diesel, we lock ourselves into the cycle: crisis, higher prices, intervention, temporary relief, another crisis.
A genuinely liberal approach will help households become less vulnerable to forces they cannot control. Better public transport. Affordable EV charging. Access to cleaner, cheaper vehicles.
Nobody should underestimate the pressure of rising transport costs. For someone driving to work, caring for a relative or running a business, the price at the pump matters. But the answer cannot be to make fossil fuels cheaper every time the world price rises. The fastest route to lower transport costs is not subsidising our reliance on oil. It is making the alternatives affordable and accessible to everyone. There is a strong case for the rest of the package, but the fuel duty cut should be parked.
* Mark Hofman has been a Councillor on Watford Borough Council since 2012.
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12 Comments
My immediate (and somewhat side-eyed) comment is to ask on the penetration of SUV ownership amongst Lib Dem voters and potential voters compared to the general population.
Given that there is some truth to the statement that we are now in substantial part a party centred around ex-Tory shires and suburbs, there is a potential defence to a pro-SUV policy on local populaist grounds.
We have had nothing except a continuing trend of fuel duty cuts going back to 2010, through a cash freeze followed by cuts whilst CPI inflation has raised wider prices by nearly 60%. Further RAC numbers are that the cost of motoring is pretty much unchanged in real terms – so this is essentially a policy pandering tpo the squeaky wheel.
Personally I think it is a disgrace that increases of duty, at least with inflation, have not been maintained throughout.
As for now, I ahbor any such cut, and suggest that a better strategy would be to remove the temporary COVID cuts which are still in place, and let the marketplace pressure incentivise electrical car use. I would suggest the resource would be far better invested in creating realistic and practical alternatives to motoring, or (second best) towards investment in UK-based electrics.
That is creating a practical and useable network of safe mobility (ie walking / wheeling / cycling) from everywhere to everywhere, and simple things such as making sure we can all walk our children to school.
So I am roughly in line with the author.
“Fuel-duty cuts are also poorly targeted. The more fuel you use, the more you save, so someone driving a large, inefficient SUV gains more than someone in a smaller family car. That is hard to square with directing scarce public money at the households who need it most.”
Indeed. Some people may need a large vehicle through need to carry several other people around, carry tools etc. for work purposes.
But if someone is about to change their vehicle perhaps best not to get one bigger than they really need.
The more fuel you use, the more you are having to pay extra due to rising fuel prices. Since most of the cost of filling your car with fuel goes straight to the Treasury – and rising fuel costs increase the tax take for the Treasury – cutting fuel duty is an appropriate response.
Considering how many of our voters live in rural and remote areas, I also think this is good politics.
I agree with Jana above. Like most people I drive to work every day, a round trip of 34 miles. This is a major cost of living and ignoring it would be electoral suicide., especially as most of our seats are large and rural like here in Cornwall.
With the closure of the strait of hormuz and shortage of diesel refining capacity the only way to bring supply & demand into balance is demand destruction. Higher prices is a good way to achieve that.
Those using the word ‘rural’ often seem to be using it as an euphemism for ‘the far side of the moon’..
A few facts…Less than 15% of the UK are deemed to live more than 1.2 miles from a regular reliable bus service..
………………….In the late 70’s, early 80’s I worked in the USA and the universal speed limit was 55mph; the country never came to a halt. I tend to drive at that speed to conserve fuel (mainly avoiding rapid acceleration/braking) and despite the current cost I’m always being overtaken, usually by those driving large SUVs, so ‘fuel costs’ don’t seem to factor as a restriction..
I live in a semi rural Suffolk village with an hourly bus service that ends at 7pm but, apart from visiting supermarkets or evening functions, I use the bus..
Perhaps those complaining about ‘living in a rural area’ might accept that it has many advantages but, also, it has consequences..
@expats
“I live in a semi rural Suffolk village with an hourly bus service”
Lucky you. Some of us have no regular bus services at all.
Nonconformistradical 24th Sep ’26 – 9:43am…
Your choice..
>” A few facts…Less than 15% of the UK are deemed to live more than 1.2 miles from a regular reliable bus service..”
It seems the government definition of a “regular reliable bus service” is at least one bus an hour, without any reference to its utility. I live in rural Northamptonshire, we only have a couple of buses in the morning and a couple in the evening – just about good enough if you work in the local town – totally unusable if you want to do anything more and want to be sure of reaching your destination. My daughter works near to a 10 year old out of town retail development, about 16 miles away, it’s a 3+ hour bus journey each way requiring 3 changes, if the services actually run, don’t skip stops (regain time) and connect…
Basically, the bus service isn’t fit for purpose, so I would keep fuel duty and instead focus on creating a public transport infrastructure that actually enable people to leave their car’s at home.
@expats
“Your choice..”
Not necessarily – some people can’t afford to move for example – an issue which has featured in the media recently. I can drive but being ancient that might not be for ever.
More rural bus services – maybe using minibuses – might make village life better and cut down on cars on inadequate rural roads.
@Roland
“Basically, the bus service isn’t fit for purpose, so I would keep fuel duty and instead focus on creating a public transport infrastructure that actually enable people to leave their car’s at home.”
Seconded
If the measure of accessibility is being less than 1.2 miles from a bus route, that is a nonsense. My estimate is that 60% of our village would be unable to walk up to 1.2 miles. We have recently had our most useful bus service axed, meaning that we can no longer use a bus to go to the shops which most of us use. The only remaining bus service is very good, but goes in totally the wrong direction. So cars remain the only option for us. We need to make more effort to convert everyone to electric vehicles.
It might be better to spend the money on increased assistance to help people switch to EVs instead. Otherwise motorists will always be dependent on the next war in the Middle East (and there’s always one every decade or so).