Chancellor Rachel Reeves has confirmed that fuel duty will remain frozen at 5p for the foreseeable future, as part of a new cost of living package designed to shield households from macroeconomic pressures such as the Iran war and the Russia-Ukraine conflict.
Fuel Duty Freeze Extended
In a statement delivered to the Commons on Thursday, May 21, Ms Reeves announced the extension of the 5p fuel duty freeze, providing relief to drivers facing rising costs at the pumps. The decision comes amid the closure of the Strait of Hormuz due to the ongoing Iran war, which has exacerbated global oil price volatility.
The government press release confirmed: "Ms Reeves has extended the 5p fuel duty freeze to protect motorists at the pump, and emergency relief for families in rural communities who have been hit by a sharp increase in the price of heating oil."
Economic Context
The Chancellor emphasized that the government has the right economic plan, pointing to recent positive indicators. The UK was the fastest-growing economy in the G7 at the start of 2026, and the IMF upgraded the UK's growth forecast for 2026 on Monday. Additionally, new figures released on Wednesday showed inflation falling faster than expected, attributed to budget measures that kept energy prices down.
The conflict involving the US, Israel, Iran, and Lebanon has now reached its three-month mark, but Ms Reeves stated her determination to shield hard-up households from the worst financial ramifications.
Reactions
Michelle Ovens, CBE, CEO and Founder of Small Business Britain, welcomed the announcement, saying: "It’s fantastic to see the Chancellor’s commitment to additional funds."
Lydia Horbury, CEO of passenger champions Bus Users UK, commented: "For many households, even small savings can make a real difference, and this initiative removes both cost and complexity by making travel simpler and more accessible."
Jason Prince, Director of the Urban Transport Group, praised the Chancellor for "helping to make public transport more affordable."
In related news, a free bus pass rule change in England has been confirmed from August 1, further supporting households with transport costs.
