Pump price cuts in November fail to reflect extent of wholesale cost falls
RAC to raise issue with Energy Secretary in a bid to support UK drivers
The average price of petrol fell by 7.5p a litre in November to 146.95p, but data from RAC Fuel Watch* shows that drivers are still paying 10p more than they should be and are far from getting a fair price on the forecourt despite recent government intervention.
Diesel came down by almost 7p to 154.40p but is also being overcharged by 5p a litre due to savings from lower wholesale costs not being passed on by retailers to drivers at the pumps.
The RAC’s analysis shows that average retailer margin on petrol is now 17p a litre and 13p for diesel. The long-term averages are 7p for petrol and 8p for diesel. This news comes as drivers are still supposed to be benefitting from a 5p-a-litre duty cut implemented in March 2022.
Instead, the figures show it’s major retailers which are gaining from this. The RAC estimates drivers have lost out to the tune of a staggering £184m over the last two months as a result not passing on the 5p duty cut.**
The RAC believes petrol should be sold for an average of 137p and diesel for 150p, based on retailers taking a fairer margin. This means drivers are currently paying around £5 more than they should be to fill up an average 55-litre family car (£80.62 v £75.35). For diesel, the figure is around £2.50 (£84.92 v £82.50).
In stark contrast, membership-only retailer Costco is currently selling unleaded for an average of 133.7p and diesel for 144p – 14p and 11p less than the UK average respectively. In Northern Ireland unleaded is being sold for an average of 141.4p and diesel for 149.5p – 5.5p and 5p less than the UK average.
The fuel finder feature in the free myRAC app shows independently run forecourt Grindley Brook in Whitchurch, Shropshire, is only charging 131.9p for petrol – matching Costco’s cheapest price, and 15p cheaper than the UK average – and 143.9p for diesel, 10.5p lower than the UK average. By comparison the average price of unleaded at the big four supermarkets is 143.37p and 151.48p for diesel.
RAC Fuel Watch data shows that the wholesale price of petrol dropped by 9p a litre in November and diesel by 7p on the back of oil averaging $84 across the month and the pound gaining ground on the dollar closing November at $1.26, up from $1.21 at the start. A litre of unleaded currently costs retailers just 106p and diesel 117p.
RAC fuel spokesman Simon Williams said: “While the price of fuel fell in November, the truth is there is no reason whatsoever for drivers to be jubilant as the data clearly shows they are continuing to get a rough deal at the pumps, unless they live in Northern Ireland.
“Wholesale fuel costs have been falling for months, so they should be paying around 137p for petrol, instead of a whopping 147p. Diesel is also overpriced at 154.40p when it should be on sale for under 150p.
“This is extremely worrying as the biggest retailers don’t seem to have heeded the warnings levelled at them by Energy Secretary Claire Coutinho at the end of October saying she wouldn’t hesitate to call out those that rip off the public.
“While the Energy Secretary’s action may have encouraged retailers to begin reducing their prices, it’s undoubtedly a case of far too little, far too late. The wholesale market data the RAC analyses shows the true picture and unfortunately, for the Government and drivers, it shows the 5p-a-litre duty cut is not getting to drivers at all, and prices aren’t falling nearly fast enough yet again.
“We’ve contacted her department to explain what’s really going on with a view to prompting greater and more effective intervention. If a price monitoring body had already been set up by now – as recommended by the Competition and Markets Authority and accepted by the Government – then this might have been prevented and people might finally be getting a fairer deal at the pumps.
“We reiterate our call to the biggest retailers to significantly cut their prices to mirror what’s happening with greatly reduced wholesale costs.”
Up to five searches a day over a two, five or 10-mile radius can be made, with each giving the five cheapest prices.
The RAC Fuel Watch web page has more information about the average price of petrol and diesel at the big four supermarkets and at motorway services. It also features graphs showing average prices since 2000 as well as a daily financial breakdown of the cost of a litre of petrol and diesel.
Retailers will be forced to provide up-to-date price information as part of new government scheme to call out rogue supermarkets and stations overcharging drivers at the pump.
Motorists will be able to easily compare fuel prices in real time to choose the best prices whilst boosting competition and in turn driving down prices.
Government action after watchdog finds some supermarkets charged drivers 6p more per litre for fuel from 2019 to 2022 – meaning £900m in extra costs across the UK in 2022 alone.
Motorists are being put in the driving seat to find the best fuel prices as the government prepares to force retailers to publicly fess up to how much they are charging at the pump.
In a win for consumers, they will be able to compare prices in real time in any area of the UK, through a new fuel price reporting scheme. Drivers will be able to easily identify those charging fair prices and those failing to pass on savings from falling wholesale costs.
The government will change the law to force retailers to comply by providing up to date price information, which is expected to lead to greater transparency and competition – in turn driving down prices and easing people’s cost of living.
The new scheme will make pricing data available for third parties – paving the way for them to create price comparison apps and websites – supporting the digital economy and helping growth.
The tough action by government follows publication of a Competitions and Markets Authority (CMA) report today showing some supermarkets charged drivers 6p more per litre for fuel. This amounts to £900m in extra costs in 2022 alone – around £75m a month.
New powers will be handed to a public organisation yet to be decided, to closely monitor the UK road fuel market, scrutinise prices and alert government if further intervention is needed.
This is the latest step in the government’s action to ease the cost of living, as part of its efforts to halve inflation this year – one of the Prime Minister’s five priorities. It follows the Chancellor’s roundtable with regulators last week, including the CMA, to ensure consumers are being treated fairly and help those struggling to make payments.
Grant Shapps, Energy Security Secretary, said: “Some fuel retailers have been using motorists as cash cows – they jacked up their prices when fuel costs rocketed but failed to pass on savings now costs have fallen.
“It cannot be right that at a time when families are struggling with rising living costs, retailers are prioritising their bottom line, putting upwards pressure on inflation and pocketing hundreds of millions of pounds at the expense of hardworking people.
“Today I’m putting into action the CMA’s recommendations and standing by consumers – we’ll shine a light on rip-off retailers to drive down prices and make sure they’re held to account by putting into law new powers to increase transparency.”
Jeremy Hunt, Chancellor of the Exchequer, said: “It isn’t fair that businesses are refusing to pass on lower prices to protect their profits while working people struggle with balancing their budgets.
“Consumers need to be treated fairly, and so we’re empowering drivers to find the best prices possible for their fuel by taking swift steps following the CMA’s recommendations.”
The CMA’s report found a concerning weakening of competition in the fuel market and an overall increase in retailers’ margins, especially in respect of diesel and with supermarkets the worst offenders (see below).
It also noted a lack of reliable and comprehensive price information available to motorists.
The report recommends the mandatory public disclosure of fuel prices and establishment of a body to monitor the market, which the government has agreed to.
The government will consult on the design of the open data scheme, and market monitoring function this autumn – with changes to the law needed to bring it in. In the interim, the CMA will create a voluntary scheme encouraging fuel retailers to share accurate, up-to-date road fuel prices for publication by August and continue to monitor fuel prices using its existing powers.
The move follows a similar scheme in Germany, which boosted competition amongst fuel retailers. Meanwhile, motorists who shopped around in Queensland, Australia, saved on average $93 per year off the back of a statewide scheme rolled out in the area.
Action to protect consumers announced today follows the government spending nearly £40 billion protecting households and businesses from spiralling energy bills over the colder months – including paying half the typical household bill and saving the average home roughly £1,500 by the end of June.
Meanwhile, with the latest Ofgem price cap coming into effect from 1 July, families will see their yearly energy bills fall by around £430 on average. On top of this, the government is also providing additional support to the most vulnerable, with an extra £150 for disabled people and £900 for those on means-tested benefits.
CMA sets out plan to help drivers get more competitive fuel prices
A new fuel finder scheme to enable drivers access to live, station-by-station fuel prices on their phones or satnavs would help revitalise competition in the retail road fuel market, the CMA said yesterday
Increased supermarket fuel margins led to drivers paying an extra 6 pence per litre
Instant access to prices via fuel finder scheme should drive down prices and help people find cheapest fuel
New monitoring body needed to hold industry to account
Asda fined £60,000 for failure to provide information when required
The scheme would be made possible by new compulsory open data requirements and backed by a new ‘fuel monitor’ oversight body. The proposals are the key recommendations by the Competition and Markets Authority (CMA) to UK government following its in-depth study into the road fuel market which found a weakening of competition in retail since 2019.
At present, retailers only provide information on prices at the petrol stations themselves. This makes it hard for drivers to compare prices and weakens competition. The fuel finder open data scheme would need statutory backing through legislation to ensure fuel retailers provide up-to-date pricing and make that available to drivers in an open and accessible format that can be easily used by third party apps such as satnavs or map apps, through a dedicated fuel finder app, or a combination of both.
The fuel monitor would monitor prices and margins on an ongoing basis and recommend further action if competition continues to weaken in the market. As the UK transitions to net-zero the demand for petrol and diesel will reduce. The fuel monitor will help us understand the impact of this on vulnerable consumers that remain dependent on petrol and diesel for longer, as well as those living in areas with limited choice of fuel stations.
The fuel monitor will ensure ongoing scrutiny of retail prices for petrol and diesel. We observed that following the interim update issued by the CMA in May 2023, the average price of road fuel fell in large parts of the UK. Over the last year, the CMA has investigated the road fuel market in detail and reached the conclusion that competition is not working well and greater transparency in pricing is needed to improve consumer confidence and bring down prices for drivers.
There is no evidence to suggest that there has been cartel behaviour taking place and the CMA has no plans to open an enforcement case.
The report found that:
From 2019-22, average annual supermarket margins have increased by 6 pence per litre (PPL)
Increased margins on diesel across all retailers have cost drivers an extra 13 PPL from January 2023 to the end of May 2023
With greater transparency and shopping around as effectively as possible, the driver of a typical family car could save up to £4.50 a tank within a 5-minute drive
Motorway service stations are charging around 20 PPL more for petrol and 15 PPL more for diesel compared to other fuel stations
Supermarkets are generally the cheapest places to buy fuel, with Asda typically the cheapest of those. This has anchored prices in the past. The CMA found that in 2022, Asda and Morrisons each made the decision to target higher margins.
Asda’s fuel margin target in 2023 was more than three times what it had been for 2019, while Morrisons doubled their margin target in the same period. Other retailers, including Sainsbury’s and Tesco, did not respond in the way you would expect in a competitive market and instead raised their prices in line with these changes. Taken together this indicates that competition has weakened and reinforces the need for action.
Diesel prices have been slow to drop in 2023, partially down to Asda ‘feathering’ (reducing pump prices more slowly as wholesale prices fell) its prices and other firms not responding competitively to that. As a result, the CMA estimates that drivers have paid 13 PPL more for diesel from January 2023 to the end of May 2023 than if margins had been at their historic average.
Sarah Cardell, Chief Executive of the CMA, said: “Competition at the pump is not working as well as it should be and something needs to change swiftly to address this.
“Drivers buying fuel at supermarkets in 2022 have paid around 6 pence per litre more than they would have done otherwise, due to the four major supermarkets increasing their margins. This will have had a greater impact on vulnerable people, particularly those in areas with less choice of fuel stations.
“We need to reignite competition among fuel retailers and that means two things. It needs to be easier for drivers to compare up to date prices so retailers have to compete harder for their business.
“This is why we are recommending the UK government legislate for a new fuel finder scheme which would make it compulsory for retailers to make their prices available in real time. This would end the need to drive round and look at the prices displayed on the forecourt and would ideally enable live price data on satnavs and map apps.
“Given the importance of this market to millions of people across the UK this needs to be backed by a new fuel monitor function that will hold the industry to account. As we transition to net zero, the case for ongoing monitoring of this critical market will grow even stronger, so we stand ready to work with the UK government to implement these proposals as quickly as possible.”
Local factors also contribute to how much drivers pay at the pump. The CMA identified that there are significant price differences in local areas, and that the difference between the highest and lowest prices in local areas has increased as average fuel prices have risen.
Lower prices are typically associated with having a supermarket retailer nearby, and where there are no supermarkets, for example, in remote areas, fuel retailers are likely to have higher costs and prices are likely to be higher. The fuel finder scheme will be important to help people find the best deal possible but it is essential that the monitoring function keeps a close eye on local variations in prices.
The price premium at motorway service stations has grown in real terms since 2012, and price variation on motorways is low, due to limited competition between service stations. A fuel finder scheme would allow drivers an easy way to see where they can find cheaper fuel in the area if they come off the motorway.
The CMA has also imposed fines totalling £60,000 on Asda for failing to provide relevant information in a timely manner.
Asda received two fines, each of £30,000 (the statutory maximum), for:
Sending a representative to attend a compulsory CMA interview who was not equipped to provide evidence on certain topics the CMA had identified in advance.
Failing to respond completely to a compulsory written request for information.
Asda has now provided the CMA with the required information.
The CMA also found that “increased margins on diesel across all retailers have cost drivers an extra 13 PPL from January 2023 to the end of May 2023.”
The organisation goes on to say:
“Over the last year, the CMA has investigated the road fuel market in detail and reached the conclusion that competition is not working well and greater transparency in pricing is needed to improve consumer confidence and bring down prices for drivers.”
However, the CMA could find “no evidence to suggest that there has been cartel behaviour taking place and the CMA has no plans to open an enforcement case.”
The CMA’s study on road fuel prices identified a reduction in competition amongst the supermarkets:
“Supermarkets are generally the cheapest places to buy fuel, with Asda typically the cheapest of those. This has anchored prices in the past. The CMA found that in 2022, Asda and Morrisons each made the decision to target higher margins. Asda’s fuel margin target in 2023 was more than three times what it had been for 2019, while Morrisons doubled their margin target in the same period.
“Other retailers, including Sainsbury’s and Tesco, did not respond in the way you would expect in a competitive market and instead raised their prices in line with these changes. Taken together this indicates that competition has weakened and reinforces the need for action.
“Diesel prices have been slow to drop in 2023, partially down to Asda ‘feathering’ (reducing pump prices more slowly as wholesale prices fell) its prices and other firms not responding competitively to that. As a result, the CMA estimates that drivers have paid 13 PPL more for diesel from January 2023 to the end of May 2023 than if margins had been at their historic average.”
The CMA is calling for the compulsory release of price data by fuel retailers so that apps can be developed which allow drivers to check what is the best price in their local area.
It also wants to see a new monitoring body to hold the industry to account.
According to the CMA “motorway service stations are charging around 20 PPL more for petrol and 15 PPL more for diesel compared to other fuel stations.”
The founder of Fair Fuel UK has called for a new consumer price regulatory body to ensure fairness for motorists at the petrol pumps.
Howard Cox says his Pump Watch initiative has “huge backing” and that he will be sending a letter to Jeremy Hunt signed by 25 MPs.
Speaking to GB News, transport campaigner Mr Cox said: “I’ve been saying for the last four or five years that we’ve been ripped off in the fuel supply chain. “There’s definitely opportunistic profiteering going on. It’s further up the fuel supply chain where it’s happening.
“It’s not the independent retailers, as most of them are actually tied to very, very strict contracts with wholesalers. It’s the wholesalers and oil refineries and the big oil companies. I’m afraid they are basically fleecing every driver.
On whether supermarkets were “missing a trick” by not reducing their prices at the pumps, he continued: “Yes, they are. Around 50% of fuel dispensed comes through supermarkets. Yet for some reason we are not seeing any reductions, and I think it must be because they’re not making so much profit on their other core areas of their business.
We used to see supermarkets give you something off per litre if you put say 50 quids worth of shopping through their outlets, but that sort of a deal seems to have disappeared.
“Now you’re seeing how independent retailers are actually cheaper than supermarkets at the moment. And it’s even worse because supermarkets buy direct from the refinery. They don’t buy through the wholesalers. So they’re making huge profits on drivers.”
Issuing a direct plea to the Government he added: “We’re still the highest taxed drivers in the world. That’s why we’re calling for a body called Pump Watch. There’ll be a letter going to Jeremy Hunt signed by 25 MPs asking for a body to actually get some transparency and fairness at the pumps.
“And the other thing we’re calling on is for the Chancellor and for Rishi Sunak to come clean and say there’s no planned increase in fuel duty in March. Because at the moment, they’re just playing these ‘will they, won’t they’ games. They seem to be enjoying upsetting drivers and upsetting businesses that need to plan for the next three to four months.”
People of our area alongside many communities have had a very tough time under this disgraceful Tory led government.
It has been no accident but deliberate policy.
The manipulation of the fuel prices causing absolute confusion.
But not for the fuel suppliers, No!! In particular the shareholders of the fuel suppliers who are making hundreds of millions of pounds in profit at the same time.
In contrast the Tories are ‘promising’ another 10% rise in the cost of living this year!
The lesson is there for us: it’s time the people slung out the Tories like they did in Honiton recently.
As households across the UK brace themselves for the impact of the cost-of-living crisis, CarStore’s Personal Advisors offer some tips to follow in order to improve fuel economy.
Mark Akbar, Managing Director at CarStore, said: “As prices at the pump are increasing rapidly and the cost-of-living crisis escalates, it’s more important than ever that drivers make the most out of every drop of fuel, improving driving economy and saving themselves money in the process.
“At CarStore our Personal Advisors are committed to listening and putting our customers’ needs first and we want share any informed, impartial advice that we can to make our customers’ lives easier and more affordable.”
“There are many different techniques and habits you can incorporate into everyday driving that will have a positive impact on your vehicle’s fuel economy. Try following even just a few of CarStore’s tips and tricks below and you may be pleasantly surprised just how much difference a change in driving style and habits can make to the miles per gallon you’ll achieve.”
Check your tyres & Tyre Pressures
One of the biggest factors in terms of fuel economy is the performance of your tyres – they are, after all, the only thing that connects your vehicle to the road. Having your vehicle’s tyres inflated to the correct pressures has a significant impact on your vehicle’s fuel economy. Under-inflated tyres can have a detrimental effect on your mpg by as much as -2.5%.
Always anticipate
Simply anticipating what is likely to happen in front of you when driving will greatly improve your efficiency as well as reduce wear and tear on your car’s brakes. While maintaining your focus on the vehicle directly in front of you, take the time to look further ahead to see what’s going on. If there’s a red light, try to lift off the accelerator a little earlier than you might normally, without taking it to extremes of course. If the lights change, you’ll still be rolling and you’ll spend less time getting up to speed, using less fuel in the process. Simply put, the less time you spend with your foot on the accelerator, the less fuel you will use.
Accelerate and Decelerate Smoothly
When the lights turn green, don’t stamp on the accelerator and get up to speed as fast as physically possible. Accelerate briskly but smoothly, reaching the desired speed in a reasonable time frame so as not to frustrate your fellow road users behind you. Don’t wait until the last minute to come to a standstill either, lift off the gas nice and early and brake gently until you come to a stop.
Remove Excess Weight
The heavier your car is, the more fuel it will use trying to get from A to B, so anything you can do to make it lighter will save you money. Roof boxes and bike racks are the main culprits, but simply having a good clear out of what’s in the backseat and the boot can have a positive impact as well.
Check Your Speed & Use Cruise Control
Always being mindful of the speed you’re travelling at is good, safe practice anyway, but it can help in terms of fuel economy too. Motorists should adhere to speed limits at all times so as they aren’t breaking the law, but saving money is another solid reason to do so. For instance, travelling above the national speed limit at 80mph instead of 70mph will use an extra 10% of fuel, as well as cost you extra money in speeding fines too. Cruise control only helps the situation too. Slowing down and speeding up increases fuel usage in a big way, so letting the car maintain the exact cruising speed for you whenever possible is simply the most efficient way to get around.
Use Your Gears Properly
It’s not part of the driving test to learn how to use your gears efficiently, you simply have to be able to use them to get the car to move at various speeds. However, to make the most out of every drop of fuel and maintain maximum efficiency, it’s vital that you’re always using the right gear at the right time. Be careful not to over-rev the engine, as this will use more fuel, and make sure you don’t labour the engine by being in a gear that’s too low for the speed and terrain. Generally, petrol cars are at their most economical between 1500 and 2500 rpm, so you should aim to change up to the next gear whenever you exceed the higher end of that band. For diesels, it’s between 1300 and 2000 rpm.
Service & Maintain Your Car
Ensuring that your vehicle is in tip-top mechanical shape is vital when making sure that fuel economy is as good as it can be. A car that has its engine serviced regularly and in line with service schedules using the correct parts, fluids and lubricants will work better and be more efficient than one that isn’t. It’ll be more reliable too. Wheel alignment (also known as tracking) can also have a negative effect on fuel economy too, and it can be knocked out by something as simple as a pot hole in the road, so make sure you get it checked regularly.
Avoid Unnecessary Idling
When the car is standstill and the engine is turned on and idling, you’re getting precisely 0 miles per gallon from your fuel. This is because fuel is being used but you aren’t going anywhere. So, waiting for a mate outside their house? Turn the engine off. Eating your burger at the drive thru? Turn the engine off. And yes, even if you’re defrosting your car, if you want to save fuel, you’ll have to turn the engine off. Modern cars with “stop/start” technology save fuel by turning the engine off while the vehicle is stationary. If your car has this function, keeping it turned on is the best thing you can do for fuel economy.
Use Air Con & Heating Functions Wisely
As a general rule, anything that drains the car’s battery in any significant way is also a drain on your car’s fuel tank. This is because it uses the alternator to charge the battery back-up, which is powered by the engine, which needs fuel to work. Air con is the biggest culprit here, increasing fuel consumption by around 5-7% in town driving. At higher speeds the effect is less noticeable, and using the air con at motorway speeds is actually more efficient than having the windows down because of the drag that’s created. Heated seats, heated steering wheels, heated windscreens and anything else heated will use extra fuel too.
Don’t Coast
Many drivers, particularly those who are used to driving cars from the ’70s and ’80s or even earlier, will swear that putting the car into neutral while going downhill or coming to a standstill will reduce fuel consumption because the rpm is lower. This is not true, certainly not of modern vehicles. Simply leaving the car in gear and coming to a stop – without labouring the engine – means you won’t be using any fuel at all. This is because the engine is using the drive. Coasting can also be dangerous too, as you’re less in control of the car.
MORE SUPPORT NEEDED, SAYS SCOTTISH FINANCE SECRETARY
The most vulnerable households across Scotland will receive support of over £1,000 this year, including a new one-off £650 cost of living payment
Universal support increases to £400 across Great Britain, as the October discount on energy bills is doubled and the requirement to repay it over 5 years scrapped
This new £15 billion support package is targeted towards millions of low-income households and brings the total cost of living support to £37 billion.
New temporary Energy Profits Levy on oil and gas firms will raise around £5 billion over the next year to help with cost of living, with a new investment allowance to encourage firms to invest in oil and gas extraction in the UK.
Millions of households across the UK will benefit from a new £15 billion package of targeted UK government support to help with the rising cost of living, the Chancellor announced yesterday.
The significant intervention includes a new, one-off £650 payment to more than 8 million low-income households on Universal Credit, Tax Credits and legacy benefits to be made in two tranches starting in the summer, with separate one-off payments of £300 to pensioner households and £150 to individuals receiving disability benefits – groups who are most vulnerable to rising prices.
Rishi Sunak also announced that the energy bills discount due to come in from October is being doubled from £200 to £400, while the requirement to pay it back will be scrapped. This means the vast majority of households will receive a £400 discount on their energy bills from October.
The new Cost of Living Support package will mean that the most vulnerable households in Scotland will receive over £1,000 of extra support this year.
To ensure there is support for everyone who needs it, Mr Sunak also announced a £500 million increase for the Household Support Fund. This brings the total Household Support Fund to £1.5 billion.
To help pay for the extra support – which takes the total direct government cost of living support to £37 billion – Mr Sunak said a new temporary 25% Energy Profits Levy would be introduced for oil and gas companies, reflecting their extraordinary profits. At the same time, in order to increase the incentive to invest the new levy will include a generous new 80% investment allowance. This balanced approach allows the government to deliver support to families, while encouraging investment and growth.
The Chancellor of the Exchequer Rishi Sunak said: ““I know that people in Scotland are anxious about keeping up with rising energy bills, which is why today we have introduced measures which will take the support for millions of the lowest income households over £1,000.
“As a nation we have a responsibility to help the most vulnerable, which is why this support is mostly targeted at people on low incomes, pensioners and disabled people. But we understand that all households in Scotland will be concerned about the rise in energy costs this Autumn, so every household is set to get £400 off their energy bills from October, with no repayments necessary.
“It is right that companies making extraordinary windfall profits from rising energy prices should contribute, and I’m introducing a temporary energy profits levy to help pay for this support, while still encouraging the investment that generates jobs in Scotland.”
Scottish Secretary Alister Jack said: “Global issues are causing real pressures in the cost of living for UK families. We understand how tough it is at the moment for many households, which is why the Chancellor has today announced a further £15 billion support package.
“A total of £400 per household towards fuel bills will help protect families from rising energy costs. Cash payments of £650 for low-income households on means tested benefits will target support at the most vulnerable in our society at this difficult time. This comes on top of our existing £22bn support package.
“Some of these measures will be paid for by a temporary levy on oil and gas companies – one which incentivises investment in the UK’s energy security.”
There is now more certainty that households will need further support, with inflation having risen faster than forecast and Ofgem expecting a further rise in the energy price cap in October.
So as part of the UK government’s targeted support, the Chancellor announced that around eight million of the lowest income households on Universal Credit, Tax Credits, and legacy benefits will receive an automatic £650 cost of living payment in two instalments via the welfare system this year.
Yesterday’s announcement is on top of the government’s existing £22 billion cost of living support which includes February’s energy bills intervention and action taken at this year’s Spring Statement including a £330 tax cut for millions of workers through the NICs threshold increase in July and 5p cut to fuel duty.
Energy Profits Levy
Surging commodity prices, driven in part by Russia’s war on Ukraine, has meant that the oil and gas sector have been making extraordinary profits. Ministers have been clear that they want to see the sector reinvest these profits in oil and gas extraction in the UK.
In order both to fairly tax the extraordinary profits and encourage investment, the Chancellor announced a temporary new Energy Profits Levy with a generous investment allowance built in. This nearly doubles the tax relief available and means the more investment a firm makes, the less tax it will pay.
The new Levy will be charged on oil and gas company profits at a rate of 25% and is expected to raise around £5 billion in its first 12 months, which will go towards easing the burden on families. It will be temporary, and if oil and gas prices return to historically more normal levels, will be phased out.
The new Investment Allowance, similar in style to the super-deduction, incentivises companies to invest through saving them 91p for every £1 they invest. This nearly doubles the tax relief available and means the more a company invests, the less tax they will pay.
The government expects the combination of the Levy and the new investment allowance to lead to an overall increase in investment, and the OBR will take account of this policy in their next forecast.
The Levy does not apply to the electricity generation sector – where extraordinary profits are also being made due to the impact that rising gas prices have on the price paid for electricity in the UK market, which has also been making extraordinary profits partly due to record gas prices but also due to how the market works.
As set out in the Energy Security Strategy the government is consulting with the power generation sector and investors to drive forward energy market reforms and ensure that the price paid for electricity is more reflective of the costs of production.
The Chancellor announced yesterday that the Treasury will urgently evaluate the scale of these extraordinary profits and the appropriate steps to take.
During the announcement, the Chancellor also set out the government’s strategy to control inflation through independent monetary policy, fiscal responsibility, and supply side activism – a plan he said that should see inflation come down and returning to its target over time.
Finance Secretary Kate Forbes has welcomed the short term action announced by the Chancellor of the Exchequer, but warned more support is needed for households and businesses as the cost of living crisis worsens.
Following calls from the Scottish Government, the UK Government has taken steps to ensure that cash grants, rather than loans, are provided to those on lowest incomes. Ms Forbes has also cautiously welcomed the decision to introduce a Windfall Tax on energy companies benefiting from significant profits but commented that it means Scottish industry is disproportionately funding interventions across the UK.
Responding to the Chancellor’s statement, Ms Forbes has said UK Ministers should have acted earlier and gone further to provide more support that would make a real long term impact, including following the Scottish Government’s lead by doubling the Scottish Child Payment to £20 per week – which is due to increase to £25 from late 2022 helping lift an estimated 50,000 children out of poverty in 2023-24.
Ms Forbes said: “Many households will be relieved to see the support belatedly announced today, but we still need a long term solution to the cost of living crisis and reassurance that the UK Government is going to tackle long term inequalities rather than provide one-off bursts of crisis support.
“Rather than listen to our plea for a comprehensive funding package that fully addresses the unprecedented rise in the cost of living and uses the full £30 billion of fiscal headroom, this piecemeal approach makes it highly likely that more support will be needed later when energy prices rise significantly in the autumn.
“There is also a severe lack of support for businesses – many of them are still struggling to recover from the pandemic and now face crippling increases in energy costs and the damaging impacts of Brexit on supply chains and the labour market. Without urgent economic support there is a real risk that the UK economy is heading for a recession.
“Inflation is at its highest levels in 40 years and the UK Government’s failure to fully invest in increasing incomes, tackling inequality and boosting economic competitiveness will only risk pushing households into further debt and poverty
“The UK Government has almost £30 billion of fiscal headroom, spending only half of this during a cost of living crisis does not go far enough, especially when a further £5 billion from the Windfall Tax will be raised.
“The introduction of a windfall tax is a start, but as a stand-alone measure this means Scottish industry is carrying the weight of UK-wide interventions.
“The removal of the £20 Universal Credit uplift last year was a hammer blow to hard pressed families and the Chancellor’s failure to restore it and increase it to £25 only places a disproportionate burden on the shoulders of those who need help most. The statement was also worryingly silent on public-sector pay with no related consequential funding, when the lowest paid need urgent assurance in the face of rising inflation.
“The refusal to reverse the National Insurance increase implemented in April and temporarily suspend VAT on household energy bills will also cost families hundreds of pounds annually at a time when their budgets have never been more squeezed.
“The Scottish Government has already taken action to support people, communities and businesses as much as possible, with almost £770 million per year invested in cost of living support. We have increased eight Scottish benefits by 6%, closer to the rate of inflation, and introduced a range of family benefits not available elsewhere in the UK.”
Commenting on the government’s cost of living support package announced today (Thursday), TUC General Secretary Frances O’Grady said: “Unions have repeatedly called for an Emergency Budget to help families, and a windfall tax on energy companies.
“The Chancellor should have acted far sooner after his inadequate Spring Statement. His dither and delay has caused unnecessary hardship and worry for millions.
“While today’s intervention is badly needed, we should have never been here in the first place.
“Years of attacks on wages and universal credit have left many households on the brink.
“The government still doesn’t have a plan for giving families long-term financial security.
“With energy bills rising 23 times faster than wages we urgently need to get pay packets rising and to pay universal credit at a permanently higher rate – not just a one-off boost.
“That’s the best way to protect livelihoods and to support the economy.”
With petrol prices hitting another record high, families and businesses are being hit in the pocket every time they fill the tank.
The RAC said today that it now costs £90 to fill a family car with petrol. The average price of a litre of petrol rose to 163.71p on Monday, and diesel also hit a fresh record of 173.68p.
The war in Ukraine triggered a surge in oil costs.
With prices so high, how do you ensure you get the most out of your tank of fuel? Greentech company SulNOx Group PLC has these top 10 tips:
Maintain your vehicle: Make sure your vehicle is regularly serviced, and regularly maintained between services. If an engine is not serviced regularly, it will use more fuel than one that is well-maintained.
Check your tyre pressure: It’s vital to make sure your tyres are inflated to the pressure shown in the car’s manual. Underinflated tyres can affect fuel economy – and so can overinflated tyres. Remember, your tyre pressure may need to be higher if you are carrying more passengers and/or a heavy load
Slow down: Excessive speed burns more fuel, as does harsh acceleration. Slow and steady wins the race!
Be smooth: In line with point 3, drive as smoothly as possible. Anticipate what’s going on ahead of you and try to slow down gradually by easing off the accelerator.
Easy on the A/C: Air conditioning burns more fuel, so don’t use it unless you need to.
Take it off: Lots of us have roof boxes and roof bars these days – and it’s often easier to leave them on. But the wind resistance caused by doing this means they use more fuel because of ‘drag’.
If you don’t use it, lose it: Lighter cars need less fuel, so don’t carry unnecessary items in the boot or the back seat.
Don’t fill up: The added weight of a full tank of fuel means burning more fuel. Next time, consider only filling half way. Don’t be tempted to run your tank down too much though. Always fill up before the red light comes on.
Get more bang for your buck: Revolutionary SulNOxEco™ Fuel Conditioners improve the combustion of light fuels including gasoline and diesel. In tests, they have proven to reduce fuel consumption by 8-10% and are certified to comply with fuel standards so any warranties remain intact. Adding SulNOx to your tank takes you further and reduces harmful emissions.
Plan ahead: Avoid rush hour black spots if you can. Use your SatNav to keep you on the right track and warn you of any potential hold-ups.
Charities bracing themselves as nearly one third of Scots say they may need to take on debt to cover the costs of Christmas
Nearly one third of people in Scotland (29%) may need to take on debt to cover the cost of Christmas this year, according to a survey of 2,000 people carried out by Censuswide for charity The Big Give.
Nearly one quarter of Edinburgh residents (24%) are not looking forward to the holiday season this year, with money worries being the most common reason, the survey also found.
While lower than the national average (16%), a shocking 13% of Scottish residents are worried they may need to use food banks to help them manage this Christmas.
Thankfully, more half of respondents from Scotland plan to donate the same amount to charities over the Christmas period. Between rising financial concerns and the ongoing health crisis that is the Covid-19 pandemic, the work done by local charities is more important than ever.
A campaign organised by the Big Give and backed by celebrities such as Stephen Fry, Dame Judi Dench, Russell Brand and others is aiming to help.
The Big Give Christmas Challenge, the UK’s biggest Christmas coordinated fundraising appeal, is supporting over 900 charities to raise funds with the unique offer of matching any donations made during the week of 30th November – 7th December.
Alex Day, Director of The Big Give said: ‘Our study shows that, sadly, people across Scotland and the rest of the UK are facing an imperfect storm; High fuel prices, chronic mental health problems, rising debt, loneliness and fears about Covid-19 will mean that, for many, this festive period will be a far cry from picture perfect scenes portrayed on Christmas cards.
‘Some will rely on charities which will be further and further stretched as demand grows.’
‘That is why, for those who can, supporting charities is more important than ever. Through The Christmas Challenge campaign, we are offering to match any donation made to hundreds of amazing charities through theBigGive.org.uk. That means whatever you can give will go twice as far.’
Both petrol and diesel now 30p a litre more expensive than a year ago, adding £16.50 to a fill-up
Diesel rose by nearly 8p in October to reach a new record price – its second highest monthly rise in 21 years
The average prices of both petrol and diesel hit new record highs in October after rising by nearly 7.5p and 8p respectively – with the price of unleaded rising faster than in any month since 2000, RAC Fuel Watch data* shows.
On Sunday 24 October petrol exceeded the 142.48p a litre all-time peak set on 16 April 2012 by reaching 142.94p. Since then the price has continued to rise, finishing the month at 144.35p and up from 136.92p at the start. Diesel also surpassed its record price of 12 April 2012 (147.93p) on the last day of the month with a new high of 147.94p, up from 139.78p on 1 October.
The October hike in the price of unleaded is the largest since 2000 at 7.43p while diesel’s 8.16p increase is second only to the 8.43p jump seen in May 2008. This has added a huge £4 to the cost of filling up a 55-litre family petrol car (£79.39) and £4.50 for a diesel (£81.37) compared to the start of October. The previous biggest petrol price rise in a single month was in May 2018 when a litre went up 6p to 129.41p.
Both petrol and diesel are now 30p a litre – 26% – more expensive than a year (petrol –114.46p on 29 October 2020 to 144.35p now; and diesel – 117.82p to 147.94p now). This means it costs £16.50 more to fill up a family car with either fuel than it did at the end of October 2020.
Oil rose by nearly $5 a barrel (6%) from $78.62 to $83.47 last month, although on 25 October it peaked at $86.16. This caused the wholesale price of a litre of unleaded to go up by 5p and diesel by 4.5p which is in stark contrast to the 7.5p and 8p forecourt rises.
The RAC Fuel Watch data shows the enormous retail price jumps appear to have been driven by the big four supermarkets which upped the price of unleaded by more than 9p a litre and diesel by more than 10p to averages of 142.18p and 145.28p respectively.
Asda had the cheapest petrol at 140.98p, only slightly lower than Sainsbury’s at 141.68p. Sainsbury’s, however, offered the lowest price diesel at 144.37p, just slightly less than Asda which charged 144.57p at the end of October.
The average price of motorway petrol was 158.43p on 31 October, with a record price set the day before at 158.56p. Diesel closed October at a new all-time high of 163.08p.
RAC fuel spokesman Simon Williams said: “October 2021 set records for all the wrong reasons and was a horrible month for drivers with both petrol and diesel prices hitting new heights. The increases of almost 7.5p being added to a litre of unleaded and more than 8p going on to diesel are some of the highest we’ve seen in the 21 years we’ve been tracking fuel prices.
“Sadly, since passing the old record from 2012 the price of petrol has continued to climb and closed October at an eye-watering average of 144.35p. With a fill-up costing £16.50 more than a year ago, the impact is definitely being felt in homes up and down the country. It’s also bound to have a negative effect on the economy.
“There is, however, a glimmer of hope that the oil price may have peaked for the time being, but much will of course depend on whether more supply is released when oil producer group OPEC+ next meets on Thursday.
“Regardless of this, the profit margin retailers are taking on each litre of petrol is greater now than it used to be prior to the pandemic, which is artificially making forecourt prices higher, particularly as VAT is charged on top. We urge the biggest retailers, in particular, to play fair with drivers and ease the burden at the pumps by lowering their margins on petrol from around 8p a litre to more normal levels.
“This month’s RAC Fuel Watch data also reveals the extent of the fuel price ‘postcode lottery’, with petrol prices in Northern Ireland being nearly 3p a litre cheaper than the South East of England where prices are higher than anywhere else.
“While Northern Ireland has the cheapest petrol and diesel in the UK, drivers there still saw an 8p a litre leap in the price of unleaded. A litre of diesel in Northern Ireland is 144.36p – the same as the average price of petrol across the UK. In the North East diesel rocketed by a frightening 9p a litre to 147.22p.”
Customers encouraged to contact supplier for support and switch to better deal if possible
Support available for customers struggling to pay bills or in vulnerable circumstances with additional help for those on prepayment meters
Energy suppliers sign up to industry commitment to reach out to those who most need help this winter
Customers can avoid the increase by shopping around or asking their supplier to put them on a better deal
The energy price cap will increase from 1 October for the 15 million customers it protects. Those on default tariffs paying by direct debit will see an increase of £139 from £1,138 to £1277. Prepayment customers will see an increase of £153 from £1,156 to £1309.
This increase is driven by a rise of over 50% in energy costs over the last six months with gas prices hitting a record high as the world emerges from lockdown.
Surging global fossil fuel prices are already driving up inflation for consumers, making fixed rate energy tariffs not covered by the price cap, as well as petrol and diesel more expensive.
The price cap offers a safety net for customers who haven’t switched by making sure that suppliers only pass on legitimate costs.
Those on default tariffs are saving an estimated £75-£100 or £1 billion every year as a result.
Any customer in vulnerable circumstances or worried about paying their energy bill should contact their supplier to access the support available.
Customers may be eligible for extra help such as affordable debt repayment plans or payment breaks, emergency credit for prepayment meters and a £140 bill rebate under the Warm Home Discount.
Last week suppliers also signed up to an industry commitment to reach out to those who most need help this winter.
Customers can also shop around to save money before the increase takes effect on 1 October.
Those who don’t want to switch supplier or are unable to can ask their supplier to put them on a better deal.
Jonathan Brearley, chief executive of Ofgem, said: “Higher energy bills are never welcome and the timing and size of this increase will be particularly difficult for many families still struggling with the impact of the pandemic.
“The price cap means suppliers only pass on legitimate costs of supplying energy and cannot charge more than the level of the price cap, although they can charge less.
“If you’re struggling to pay your bill you can get in touch with your supplier to access the help that’s available and if possible, shop around for a better deal.
“We have put tough rules in place to ensure suppliers treat customers who are struggling with bills fairly, and welcome their commitment to reach out to those who most need help this winter. Where help is not forthcoming, we will not hesitate to act.
“I appreciate this is extremely difficult news for many people, my commitment to customers is that Ofgem will continue to do everything we can to ensure they are protected this winter, especially those in vulnerable circumstances.”
Ofgem adjusts the price cap twice a year based on the latest estimated costs of supplying energy.
The biggest and most unpredictable factor is the wholesale cost of electricity and gas paid by suppliers and influenced by global markets. This accounts for roughly 40% of the overall price cap level.
Gas prices have risen to a record high in Europe due to a recovery in global demand and tighter supplies. This is increasing the cost of heating homes and pushing up electricity prices.
Last winter, the level of the cap fell by £84 after passing onto customers the savings from lower wholesale energy costs as countries went into lockdown and demand fell.
