Labour has scrapped plans to hike fuel duty in September following serious pressure from drivers and rising fuel costs caused by the Middle East crisis.
The Government will now extend the 5p freeze until December 31, in a move welcomed by petrol and diesel drivers who have seen costs spiral over the past few months.
Under previous plans unveiled at the Autumn Budget, Chancellor Rachel Reeves revealed plans to raise the fuel duty tax in September, ending cost-saving measures which had been in place for the past 15 years.
But following pressure from MPs, campaigners and most importantly drivers, fuel duty will no longer be increased in line with inflation.
The Prime Minister said: "I can announce that we are backing drivers by extending fuel duty for the rest of the year. This is possible because of the decisions taken by the Chancellor, making us the fastest-growing economy in the G7.
"I know many are feeling the pressure of energy and fuel costs, and are worried about how the conflict in Iran will affect their finances. Because when global events drive up prices, it's working people who feel it first.
"That's why this Government is stepping in to keep fuel costs down for millions of drivers and putting money back in the pockets of working people."
The fuel duty freeze was expected to begin in September and start rising over the following months
| PAThe fuel extension hopes to save the average driver £120 since 2025, keeping fuel duty on petrol and diesel at its lowest rate for over 16 years.
On top of extending the fuel duty freeze, the Government also announced plans to give hauliers a 12-month Vehicle Excise Duty holiday, saving £600 for a typical heavy lorry and up to £912 for HGVs with the highest VED rates, as well as slash red diesel to its lowest rate in over 20 years until the end of the year.
The new red diesel rate will be reduced from 10.18p to 6.48p and will come into effect from June 15, remaining in place until the end of the year.
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The 15-year fuel duty freeze was extended by the Labour Government
| PAThe Chancellor also revealed that the plans will see farmers, rail freight, and other red diesel users benefit from having fuel duty cut by over a third until the end of the year.
Under the new rates, fuel duty will be cut from 10.18p to 6.48p per litre and will be in place until the end of the year.
Ms Reeves said: "I'm keeping taxes down for drivers and businesses, putting money in the pockets of millions of workers and cutting costs for farmers and hauliers.
"The war in Iran is pushing up fuel prices here at home, but after strong growth at the beginning of the year, I am stepping in to protect people at the pump. By protecting households and businesses, we are building a stronger and more secure economy for Britain. That is the right economic plan."
Fuel duty was expected to be raised in line with inflation in September
| PA"This is the lowest rate in over 20 years, helping to keep the cost of doing business down at a difficult time when red diesel prices are around 50 per cent more than their pre-crisis levels," the Treasury stated.
Commenting on the news, the Association of Taxation Technicians' director of public policy Emma Rawson said: "Any decision to avoid further increases in fuel duty will be welcomed by many motorists and businesses already struggling with rising costs.
"But repeated short-term changes to fuel duty policy are not a sustainable long-term solution. The Government urgently needs to set out a clear strategy for replacing declining fuel duty revenues in a way that is fair, practical and environmentally coherent. That should include an open and informed debate about how we tax road use in the future as the vehicle fleet changes."