The warning comes ahead of the UK Autumn Budget, expected in late October or early November, when the Chancellor will decide whether to continue or scrap the fuel duty freeze that has been in place since 2011. A temporary 5p cut was introduced in 2022 to ease pump prices following Russia’s invasion of Ukraine.
The RHA commissioned Full Circle Economics (FCE) to model the impact of higher road fuel taxes on consumer prices and business costs. The study found that a 5p duty increase would not only raise the cost of filling up but also ripple through the economy, adding an estimated £7.3 billion to household living costs by 2029.
Fuel typically accounts for 20–25% of a haulier’s operating costs, meaning even a small rise can have a disproportionate impact. For a 50-vehicle fleet, a 5p duty hike could add £125,000–£150,000 a year in additional costs.
“Diesel costs more here than anywhere else in Europe, and over half of every pound at the pump already goes to Government,” said RHA Managing Director Richard Smith. “Road freight transport firms keep shops stocked and building sites running, but they’ve been squeezed in recent years. A fuel duty increase would be a hammer blow to a key industry already operating on tight margins.”
From fuel tanks to family budgets
According to the FCE analysis, a 5p per litre duty rise would increase overall consumer prices by 0.3%, equivalent to about £2 billion a year in higher living costs. The effect would reach far beyond haulage, raising prices for food, drink and household energy as distribution costs rise.
The report also warns that the increase would hit lower-income families hardest, as food and energy make up a larger share of their spending. For the average car-owning household, the extra fuel duty would mean about £100 more per year, climbing to £360 by 2029.
Competitive disadvantage
The RHA argues that any rise would deepen the UK’s competitive gap with Europe, where diesel prices are lower and many foreign hauliers can refuel before entering the UK. British operators serving international routes would be left at a clear disadvantage.
In addition, many hauliers operate on fixed-rate contracts that do not allow for immediate fuel cost adjustments. This means firms would have to absorb the rise upfront, creating cashflow pressure at a time when insolvencies in the sector are already rising.
“Costs don’t disappear”
“When businesses face higher fuel costs, the costs don’t disappear,” Smith added. “They flow through the supply chain. This means households pay more for the weekly shop and energy bills. The essentials are hit hardest, and lower-income families feel it most.”
The RHA has called on the Chancellor to maintain the fuel duty freeze in the upcoming Autumn Budget, arguing that stable fuel taxation is essential for both hauliers and consumers.
