Fuel duty remains frozen in major victory for drivers as Rachel Reeves spares motorists from Budget tax hikes

She said: "To retain the 5p cut and to freeze fuel duty again would cost over £3billion next year.

"At a time when the fiscal position is so difficult, I have to be frank with the house that this is a substantial commitment to make.

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"I have concluded that in these difficult circumstances, while the cost of living remains high and with the backdrop of global uncertainty, increasing fuel duty next year would be the wrong choice for working people.

"It would mean fuel duty rising by 7p per litre. So I have decided today to freeze fuel duty next year and I will maintain the existing 5p cut for another year too. There will be no higher taxes at the petrol pumps next year."

At present, drivers are paying an average of 135.26p per litre for petrol, while diesel drivers are forking out £1.40, according to the latest research from RAC Fuel Watch.

In March 2022, Rishi Sunak, who was Chancellor at the time, announced the 5p per litre fuel duty cut in response to the Russian invasion of Ukraine and global concerns about oil prices.

While the move has been extended twice, many experts and organisations have pointed out that drivers have very rarely been passed on to drivers, with major retailers and supermarkets failing to help drivers.

There had been fears that Chancellor Rachel Reeves would hike fuel duty after refusing to rule it out in Parliament yesterday.

She said: "The previous Government factored into their forecast an increase in fuel duty this year. I will set out our plans in the Budget tomorrow."

Reacting to the changes, RAC head of policy Simon Williams, said: “Drivers will breathe an enormous sigh of relief after all the speculation that the 5p cut would be scrapped at the same time as pushing duty up beyond the long-term rate of 57.95p.