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Two-thirds of drivers are cutting back as pump prices approach record levels
RAC research published the day before the Budget finds 65% of motorists trimming other spending to cover fuel, and a narrow preference for a VAT cut.
Diesel passed £2 a litre for the first time at the start of October, and unleaded nudged £1.75, its highest price in more than four years. The RAC's research published today puts the household effect of that in numbers: 65% of motorists say they are cutting back on other spending to cover the cost of fuel, up from 61% in April. Among drivers who have no choice but to use their car, 47% say they are struggling with the cost, against 39% in April.
The timing matters. The Chancellor delivers his first Budget tomorrow, and the RAC's polling asks drivers which lever they would pull. A cut in VAT on fuel was the most popular answer at 34%, narrowly ahead of a further cut in fuel duty at 29%. Another 13% would settle for fuel duty being held where it is, at 52.95p a litre, rather than rising as planned.
Why the year has been so expensive
The RAC attributes the run-up to two things: the US and Iran conflict pushing oil prices higher, and disruption to global diesel supplies caused by Russia's war in Ukraine. The diesel market has been the tighter of the two, which is why diesel crossed £2 before petrol reached its own recent highs, and why the gap between the two fuels has widened.
On the RAC's assessment, 2026 is on course to be the second most expensive year on record for filling up, behind 2022. That comparison is doing a lot of work, because it holds fuel duty constant: duty has been at the reduced rate of 52.95p a litre since the war in Ukraine began, so the increase drivers have felt this year comes from the fuel itself rather than the tax on it. We tracked the diesel side of that story when it first touched two pounds a litre in our piece on the two pound threshold, and again when it slipped back below it later that month.
What each option would actually save
The RAC costed the choices, and the numbers are smaller than the argument around them suggests. Cutting fuel duty by 2p, to 50.95p, would save £1.30 a tank. A 5p cut, to 47.95p, would save £3.30 a tank.
VAT works differently, because the amount charged moves with the price of the fuel rather than the volume. On current average prices, the RAC calculates that cutting VAT by 2.5 points to 17.5% would save about £2 on an unleaded fill-up and £2.30 on a diesel one. A cut to 15% would save roughly £4 on petrol and £4.60 on diesel. A cut to 10% would take £7.90 off a tank of petrol and £9.10 off diesel.
The scale of what is being argued over is set by a different number in the same release. Fuel duty and VAT together make up 47% of the cost of a litre of unleaded and 43% of a litre of diesel. That is the share of the pump price the Chancellor controls, and it is why the choice between the two levers is a genuine one rather than a presentational difference.
Rod Dennis, senior policy officer at the RAC, put the case for acting in either form. The status quo, with fuel duty set to rise 5p by the spring, "feels unsustainable, so we very much hope it's a question of 'how' they are supported in Wednesday's Budget, and not 'if'." He also made the point that the price is driven by events the government does not control, and the tax on it is the part it does.
There is a third consideration that the polling cannot capture. Fuel duty is a fixed cash amount per litre, so a cut costs the Treasury a predictable sum and reaches every driver. VAT on fuel is a percentage, so a cut costs more as prices rise, which is why successive governments have preferred to adjust duty and leave VAT alone.
The pressure the Chancellor is under
The numbers describe a squeeze that has been building all year rather than a sudden shock. The share of drivers cutting back rose four points in six months, and the share of car-dependent drivers saying they are struggling rose eight. Those are the people for whom the car is not a choice, and they are the group any fuel measure is really aimed at.
The RAC's own framing is that duty has been the default lever for a decade and that a VAT cut is an alternative it wants considered. Whether that happens is a political decision rather than an economic one, and it will be taken tomorrow.
What it means for the household budget
For anyone running a petrol or diesel car, the practical arithmetic this month is that a tank costs about £120 and the tax content of it has not changed. The measures being debated would move the total by a few pounds a tank, which is real money over a year and small against the movement in the underlying price.
That is why the fuel price story keeps turning into an electric car story. When a full tank costs £120 and an electric car covers a mile for around 2.4p, the case for switching strengthens, and the RAC has found before that high prices move drivers towards considering electric. Our comparison of fuel duty and the electric mile sets out the gap in cost terms, and the public charging price tracker shows what the alternative costs for drivers without a driveway.