Tuesday 22 November 2016 5:00 am

Fuel duty should be cut, not frozen, in the Autumn Statement, urges campaign group FairFuelUK

An expected fuel duty freeze in tomorrow's Autumn Statement should be switched to a 3p-per-litre cut that would add £850m to the UK economy next year, campaign group FairFuelUK has urged. 

Chancellor Philip Hammond is thought to be scrapping a planned 2p-per-litre rise in fuel duty, due to come into force in April, and will instead freeze the duty again until April 2018.

As well as making a "considerable" saving on 37m drivers' cost of living, a 3p-per-litre cut would create another 8,000 jobs. It would save households an additional £116 on average, adding up to an aggregate saving across all households of £3.2bn, a report from the Centre for Economics and Business Research (CEBR) for FairFuelUK found. 

Read more: Autumn Statement: What's in store for energy, fuel duty and North Sea oil

In addition, it would add £850m to the UK's GDP "with no change in the net tax position due to the loss of duty, simply because the levy reduction will be compensated by the boost to income tax revenues", the research also found.

"FairFuelUK’s new CEBR report clearly shows cutting fuel duty would be a huge boost for the hard-working classes of modern Britain. It would mean more jobs – and more money in the pockets of families and small businesses," said Dover MP and chair of the All Party Parliamentary Group on Fair Fuel, Charlie Elphicke. 

"This is a powerful case for the chancellor that lower fuel duty will help turbocharge growth in Brexit Britain."

Read more: AA plea to Osborne: Don't hike motorists' bills

Rising oil prices and the sharp fall in the value of the pound is making fuel, which is traded in dollars, more expensive for the UK to buy in, according to the RAC. This has recently led to a spike in the wholesale and retail prices of both petrol and diesel. 

Even with a fuel duty freeze, UK petrol drivers will remain the fifth most taxed in the world and diesel drivers will be the number one most taxed in the world, according to FairFuelUK. 

In the March Budget, former chancellor George Osborne froze fuel duty for the sixth year in a row. This created 112,000 jobs and added an annual boost of 0.57 per cent to the UK economy, FairFuelUK said. 

Earlier this month, a group of 50 Tory MPs, led by Elphicke, demanded a cut in fuel duty in Hammond's first Autumn Statement, warning consumers and businesses are being ripped off at the petrol pumps. 

They also demanded the establishment of an independent "PumpWatch" body to monitor fuel prices and press for transparency.