UK Govt. Counts The Cost Of Fuel Duty Slump

Tue 28th Jul 2020

The pandemic lockdown has had a major effect on the UK Treasury coffers after it was revealed that the loss of fuel duty revenue has cost £2.4 billion.

The lack of cars on the roads during lockdown has seen a huge slump in fuel duty figures down from £1.5 billion to £815 million in April and suffering an even bigger loss in May, dropping from £1.4 billion to £695 million.

The HM Revenue and Customs data has been revealed by the RAC, whose own figures show that during April and May 2020, at the height of the coronavirus lockdown, just 50 per cent of the cars on its own telematics insurance policies were actually on the roads.

“The financial impact of coronavirus on the Government has clearly been immense. The lost revenue on fuel duty is a further blow to the public finances and, while motor traffic volumes have recovered during the summer, they are still between 10 to 15 per cent below pre-lockdown levels,” said Nicholas Lyes, head of roads policy at the RAC.

“The temptation for the Chancellor might be to recoup some of the losses by increasing fuel duty, but with the country staring down the barrel of one of the sharpest recessions on record, such a move would risk choking any economic recovery at a time when drivers and businesses are most struggling.

“This perhaps gives the Government a glimpse into the future of when fuel duty revenues start to decline more sharply with the rise of electric and other alternatively fuelled vehicles. Treasury officials might want to start thinking about how the Government approaches such a scenario considering fuel duty normally generates around £27bn a year.”