Groups call on Chancellor to end fuel duty cut and charge EV drivers per mile
7 November 2025
Campaign for Better Transport and six other organisations have written to the Chancellor ahead of the Budget urging her to reclaim £4.2 billion a year in lost revenue by allowing the “temporary” 5p fuel duty cut to come to an end and ending the 14-year fuel duty freeze. The groups also call on the Chancellor to set out a clear process and timetable for introducing a per-mile charge on electric vehicles.
In the joint letter to Rachel Reeves, Campaign for Better Transport, Walk Wheel Cycle Trust (formerly Sustrans), London Cycling Campaign, Living Streets, the Social Market Foundation, Possible and Transport Action Network, argue that the fuel duty cut and freeze are increasingly unsustainable. They also urge the Chancellor to charge electric vehicle drivers fairly to avoid plummeting revenue as the transition to EVs gathers pace.
On fuel duty, the letter highlights that allowing the cut to expire would recoup £2.6 billion a year in lost revenue, and reinstating the annual inflation-linked fuel duty rise would raise a further £1.6 billion in the first year alone. The impact on fuel bills for individuals would not be large, and the additional income could be invested in infrastructure improvements and public services to the benefit of millions of households and go some way to plugging the reported £22 billion shortfall currently faced by the Government.
Ben Plowden, Chief Executive of Campaign for Better Transport, said: “The politics of increasing fuel duty are not easy, but nor are any of the other fiscal choices available to the Government. Both the fuel duty cut and the fuel duty freeze have become increasingly fiscally unsustainable. Correcting this long-standing anomaly in transport taxation should be seen as a ‘least bad’ option that would bring significant social, economic and environmental benefits.”
The freeze on fuel duty since 2011 is estimated to have cost the Treasury £133 billion in lost revenue. The 5p fuel duty cut, introduced as a temporary measure five years ago, has cost a further £13 billion. Campaign for Better Transport has calculated that together, this foregone revenue is the same as the Government will spend on the state pension this financial year.
Analysis by the Social Market Foundation suggests that, far from helping low-income households with the cost-of-living squeeze, richer households with higher car use have saved nearly three times as much in fuel costs as the poorer households in recent years.
Mr Plowden added: “The Chancellor has some difficult choices to make, but, with the cost of petrol and diesel now much lower than when the 5p fuel duty cut was introduced five years ago, the resulting revenue from ending the fuel duty cut and freeze could be used to benefit millions more people than it currently does and help alleviate the ongoing cost-of-living squeeze on households by providing better and more affordable public transport.”
On electric vehicles, the letter highlights that the transition to EVs is estimated to create a £9 billion gap in fuel duty revenues by 2030 and £27 billion by 2040.
Mr. Plowden said: “EV drivers could be charged a simple, per-mile charge, set at a level designed to keep electric vehicles attractive relative to more polluting vehicles. This would help restore fairness to transport taxation and avoid a looming budget black hole. Our research has shown that such a charge has high levels of support with the public.”
ENDS
For further information please contact the press office on 07984 773 468 (calls only no texts) or communications@bettertransport.org.uk.
Notes to Editors
1. The letter has been signed by Ben Plowden, CEO of Campaign for Better Transport; Xavier Brice, CEO of Walk Wheel Cycle Trust (formerly Sustrans); Tom Fyans, Chief Executive of London Cycling Campaign; Tanya Braun, Director of External Affairs & Fundraising at Living Streets; Gideon Salutin, Senior Researcher at the Social Market Foundation; James Sutton, Co-Director, Campaigns and Communications at Possible; and Chris Todd, CEO of Transport Action Network.
2. Between 2011/12 and 2024/25, the fuel duty freeze has cost the Exchequer a cumulative £133 billion based on figures obtained from the Office for Budget Responsibility.
3. In last year’s Budget, the Government said freezing fuel duty and extending the temporary 5p cut would save the average car driver £59 a year.
4. Government spend on the State Pension is forecast to be £145.6 billion in 2025 to 2026.
5. Social Market Foundation research found that the richest fifth of households have benefited twice as much as the poorest from fuel duty policies.
6. Fuel duty revenue is projected to decline as the transition to electric vehicles gathers pace. PwC estimates this will create a £9 billion gap in fuel duty revenues by 2030 and £27 billion by 2040.
7. Campaign for Better Transport’s 2022 report, Pay-as-you-drive: the British public’s views on vehicle taxation reform, was based on the results of four focus groups and a detailed 60-question survey of over 3,000 adults from across the UK. Sixty-five per cent of people believed it is fair for EV drivers to be taxed but at a lower rate than petrol and diesel drivers so as not to slow down their uptake, versus 19 per cent who disagreed. Forty-nine per cent supported the idea of pay-as-you-drive, after arguments for and against were discussed, while only 18 per cent opposed it.
8. Campaign for Better Transport operates in England and Wales. Campaign for Better Transport’s vision is for all communities to have access to high-quality, sustainable transport that meets their needs, improves quality of life, reduces inequality, and supports a vibrant, productive and decarbonised economy. Campaign for Better Transport Charitable Trust is a registered charity (1101929).
