The AA is calling on the Chancellor to protect the existing 5p fuel duty cut at the Budget and go further by cutting duty by another 5p per litre.

In a letter to the Chancellor ahead of the Budget on 28 October, The AA warns that reversing the existing reduction would put further pressure on drivers at a time when pump prices have already risen sharply. Instead, The AA wants the existing 5p reduction maintained and an additional 5p-per-litre cut introduced.

Once VAT is taken into account, the additional 5p cut would be worth around 6p per litre at the pump, if passed on in full. That would save approximately £3.30 when filling a typical 55-litre tank.

Compared with allowing the existing 5p reduction to disappear and making no further cut, the difference for a driver filling a 55-litre tank would ultimately be around £6.60. The call comes as drivers continue to face high pump prices. AA analysis of the Government's Fuel Finder data found that at the beginning of October 2,577 filling stations out of approximately 8,000 were charging £2 per litre or more for diesel.

The AA says action on fuel duty would not only help drivers, but could also help businesses contain costs and limit wider inflationary pressures. Higher road fuel prices increase the cost of moving goods, making deliveries and providing services. Hauliers, tradespeople, delivery companies, retailers and service providers can all face higher costs when petrol and diesel prices rise, which can ultimately be passed on to households through higher prices.

The AA is also asking the Treasury to take into account the additional VAT revenue it receives as underlying fuel prices increase when costing a further reduction in fuel duty.

Drivers need the Chancellor to put the brakes on rising fuel costs. The first step must be keeping the existing 5p fuel duty cut, but with prices rising we believe the Chancellor should go further and cut another 5p. If passed on in full, that additional cut would take around 6p off a litre at the pump and save around £3.30 when filling a typical family car.

Allowing the existing cut to disappear would take drivers in precisely the wrong direction. Compared with that outcome, keeping the 5p reduction and going 5p further could make a difference of around £6.60 on a tank.

Fuel prices aren't just an issue for motorists. Higher prices increase the cost of moving goods, making deliveries and running businesses, with those costs ultimately finding their way into household bills.

As underlying fuel prices rise, the Treasury also receives more VAT. We believe the Chancellor should take that additional revenue into account and use the Budget to give drivers and businesses some breathing space.