Reeves has been accused by industry of seeking to profit from the Iran crisis (Image: Getty)
The Chancellor found herself under fire from multiple directions last night — with senior business figures, the leader of the opposition and petrol retailers all lining up to accuse Rachel Reeves of being the real profiteer in Britain’s fuel crisis.
The assault landed at a delicate moment. Downing Street had spent weeks pointing the finger at forecourt operators, with both the Prime Minister and the Chancellor suggesting it was retailers — not the Treasury — who were squeezing drivers. The business community’s response has been to turn that argument on its head.
Their case is straightforward: every time pump prices rise, the Government’s haul from VAT and fuel duty rises with it. The retailers’ margin stays fixed. The Chancellor’s does not.
Lord Wolfson draws a line
Chairman Lord Wolfson reportedly put the demand from industry in plain terms.
“I think a reasonable ask from our industry – and in fact all industry – is that the Government doesn’t end up profiting from it,” he is understood to have said.
“That would be a very reasonable ask to say to the Government: “Don’t actually make more money out of this than you were expecting’.”
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Badenoch goes on the attack
The Conservative leader made her entrance at a fuel industry event aboard a Fuel Britannia-branded tanker — a piece of theatre designed to underscore her solidarity with forecourt operators who feel they have been made scapegoats, reports the Daily Mail, which outlined how she demanded an apology from Labour after it became clear the evidence for price gouging by petrol firms was thin at best.
She reportedly said forecourt bosses were ‘working hard, getting up early. They’re being taxed to the hilt.
“They’re being blamed for fuel duty price rises. Where actually it’s Rachel Reeves who’s doing the price gouging.”
Speaking separately at a West London building site, Badenoch broadened her attack — accusing Labour of driving ahead with economic policies she described as ‘impoverishing households, families and businesses.’
“It’s time to scrap the silly tax rise which Rachel Reeves is putting on fuel duty. It is time to get Britain working again,” she said.
Who is actually making the money
The RAC puts the current retailer margin at six per cent per litre — a figure that has remained largely stable. The Government’s position is quite different. Fixed fuel duty stands at 52.95p on every litre sold, and because VAT is charged at 20 per cent on the total pump price, every penny of price inflation feeds directly into Treasury receipts.
War-driven price rises have added roughly 15p to the cost of a litre of petrol and 30p to diesel since hostilities began. One analysis published this week put the additional burden on British motorists at more than £300 million.
Fuel duty increases of 1p, 2p and 2p are scheduled for September, December and March 2027 respectively — a pipeline of rises Labour has shown no appetite to reverse.
The Downing Street standoff
Behind the public war of words lies a messier private confrontation. The Government called petrol companies and energy suppliers to Downing Street and told them directly to stop overcharging. Forecourt operators walked out of the first meeting, offended by the confrontational framing coming out of Whitehall, before eventually being talked back to the table.
Former BP executive Nick Butler put a stark timeline on the situation yesterday — warning that oil and gas shortages could materialise within two to three weeks. On the same day, a Tesco store in Worcester sold its last drop of fuel, states the report.
The Express understands government ministers maintained that drivers had no reason to alter their behaviour and that contingency planning for blackouts or rationing was not underway.
Reform and M&S add their voices
Reform’s treasury spokesman Robert Jenrick demanded Reeves cut VAT on petrol by half for a three-month period.
“She’s making tens of millions of pounds a week in extra tax revenue as a direct result of the war; the least she could do is lessen the blow,” he said.
M&S chief Stuart Machin took a different but equally pointed angle — targeting the green levies embedded in energy bills that he said bore no relationship to the underlying cost of oil or gas.
Those policy costs, he said, had become “just not sustainable” — having ballooned to account for more than half of M&S’s total energy bill.
“Over the last few years the ‘policy costs’ on our energy bill have sky-rocketed,” Machin wrote on LinkedIn. He saved his sharpest words for Labour’s employment levies — branding them as “letting down a generation of kids.”
A Treasury source reportedly said: “We took action precisely to prevent companies exploiting this crisis – and if they do, we will clamp down on it – because Labour is on the side of working people.”