Starmer refuses to rule out first fuel duty rise in 15 years as Labour seeks to close Budget black hole

PM says he wants to ‘inject hope’ for the British people but is government is still mulling over options for tax rises

Motorists could be hit by the first fuel duty rise in 15 years as Labour tries to balance the books.

Sir Keir Starmer was unable to say if fuel duty would be frozen again when questioned by journalists on a whistlestop tour of Germany and France as his government seeks to fill a £22 billion budget black hole it claims the Tories left behind.

It comes amid speculation that there will also be a series of wealth taxes including a hike in rates for capital gains and inheritance after the prime minister warned earlier this week of “a really painful Budget” on 30 October.

Labour have insisted there will be no increases in income tax, VAT or national insurance but ruled nothing else out.

Prime Minister Keir Starmer (Justin Tallis/PA) (PA Wire)

Fuel duty has been frozen since 2010 when George Osborne in effect cancelled the fuel duty escalator introduced by Gordon Brown.

However, the Tories have claimed that the black hole in the finances Labour claim to have found is “an excuse to raise taxes” which Starmer and his chancellor Rachel Reeves said they would not do in the election.

Critics of the new government have pointed out that Labour have agreed inflation busting pay rises for the public sector since coming to office despite saying there is no money.

But already Ms Reeves has announced a series of spending cuts including removing winter fuel allowance from 10 million pensioners and ending plans to introduce financial support for care for the elderly.

A hike in fuel duty could be portrayed as the next chapter in Labour’s so-called “war on the motorists” by their opponents after the introduction of schemes like the extension of the ultra low emission zone (Ulez) in London by Sadiq Khan.

But after a week where he was accused of being gloomy after a keynote speech in Downing Street where he warned of things “getting worse before they get better” as his government attempts “to fix the rot” for 14 years of Tory government, Sir Keir has insisted he wants to “inject hope” for the British people.

Speaking to reporters in Berlin on Wednesday, Sir Keir said the public would still see an improvement by the end of the Parliament.

He said: “Let me inject some hope because the whole point of this exercise is to make sure we can bring about the change that we need.

Chancellor Rachel Reeves will be unveiling her first Budget in October (Jonathan Brady/PA) (PA Wire)

“If you don’t clear out the rot and don’t do it properly, you’ve got nothing to build on, and therefore this is a vital step.”

Challenged on specific tax rises, the Prime Minister reiterated his manifesto commitment not to raise income tax, national insurance or VAT – which he has previously described as taxes on “working people”.

But he was unable to rule out the first rise in fuel duty since 2010, saying he would not “speculate” on the Budget.

He said: “Whatever party is in power, the questions about what’s going to be in the Budget are never questions answered before the Budget.”

“But my absolute determination is to have economic growth. And I do not think that the only levers that a government can pull, particularly a Labour government, is simply tax and spend.”

Commentators have warned that fuel duty could be increased at the Budget, with the RAC’s head of policy Simon Williams saying the 5p discount cost £2 billion but was not passed on to drivers.

He said: “We’d normally be against any increase in duty, but we’ve long been saying drivers haven’t been benefiting from the current discount due to much higher-than-average retailer margins.”

Separately on Wednesday, Ms Reeves declined to rule out increases in inheritance tax or capital gains tax, saying she was not going to “write a Budget two months ahead of delivering it”.

Senior Conservatives have accused Labour of being dishonest about its plans for taxes during the election campaign.

Leadership contender Robert Jenrick said the Government was “shamelessly rewriting history” to lay “the groundwork for huge tax rises” while former prime minister Rishi Sunak said Labour had always been planning to increase taxes.

Along with questions about tax rises, the Prime Minister has attempted to fend off accusations of cronyism following revelations Lord Waheed Alli, a major Labour donor, had received a security pass for 10 Downing Street.

Sir Keir denied that there was any impropriety in giving Lord Alli a pass, saying he had been assisting in Labour’s transition into Government.

He said: “He had a pass for a short time, the work he did finished and he hasn’t got a pass any more. That’s the long and the short of it.”