Rachel Reeves was slapped down by the competition watchdog today over claims petrol forecourts were ‘profiteering’ amid the Iran war.
The Chancellor was publicly humiliated by the Competition and Markets Authority (CMA), which found in a study that margins at the pumps were ‘broadly unchanged’ since the conflict started.
The watchdog's chief executive, Sarah Cardell, added: ‘On average, retailer fuel margins did not increase.'
It comes after Ms Reeves alienated industry leaders by claiming they were using soaring oil prices caused by the war as cover to fleece drivers, sparking a furious row which saw them threaten to pull out of a meeting with her in March.
But the Chancellor faced fresh accusations today that she was the ‘real profiteer’ after the VAT windfall she has raked in because of higher pump prices over the last two months surged to nearly £350million.
Ms Reeves is refusing to use the windfall to ditch her planned fuel duty hike, which kicks in from September and will add another £3 to the average cost of a fill-up.
This is despite most other countries cutting fuel taxes to help out hard-pressed drivers.
Reform UK, the Tories and the Liberal Democrats have all called on Labour to ditch the hike.
The Chancellor faced fresh accusations today that she was the ‘real profiteer’ after the VAT windfall she has raked in because of higher pump prices over the last two months surged to nearly £350million
The CMA study found average petrol and diesel prices soared by 26p a litre and 50p a litre respectively between 20 February, a week before the conflict started, and 20 April
Reform UK’s Treasury spokesman Robert Jenrick said Rachel Reeves was the 'real profiteer at the pump as she loads on even more tax on fuel'
Reform UK’s Treasury spokesman, Robert Jenrick, told the Daily Mail: ‘Rachel Reeves is the real profiteer at the pump as she loads on even more tax on fuel.
‘Instead of desperately casting around for someone else to blame, she should scrap her disastrous fuel duty increase and make an emergency VAT cut on fuel as 40 other countries have.’
The Tories’ shadow transport minister Greg Smith said: ‘The only one price gouging out of this crisis is the Chancellor, who is taking in huge increases in VAT then cranking up fuel duty by 5p a litre from this September.
‘Once again, this is a government trying to blame everyone else when it's their own tax choices that are really hurting.’
Daisy Cooper, Treasury spokesman for the Liberal Democrats, which is calling for fuel duty - currently 52.95p a litre - to be cut by 10p, said: ‘The Treasury is raking in millions while businesses go to the wall and families struggle to put food on the table.
‘It’s outrageous that whilst the country faces spiralling costs, the Government is just sitting on its hands.
'The Chancellor must act now and introduce Lib Dem plans for an immediate fuel duty cut, saving families £6.60 on every tank of fuel.'
Pressure has been mounting on the Chancellor to scrap her 5p a litre fuel duty hike after the extra amount drivers have shelled out at the pumps since the war started surged past £2billion this week.
Daisy Cooper, Treasury spokesman for the Liberal Democrats, said it was 'outrageous' Labour plans to press ahead with its fuel tax raid this Autumn
The cost of filling the average 55-litre tank in a family car with petrol surged more than £14 and £28 for diesel over a two-month period because of the Iran war, the CMA study found
It means that she has raked in an extra £350million in VAT receipts because higher pump prices mean the 20 per cent levy accounts for a larger slice going into Treasury coffers.
Oil prices also jumped to their highest level since 2022 this week, with Brent crude leaping to more than $126 (£94) a barrel.
While it fell again, pump prices are likely to remain high for months as the Strait of Hormuz remains closed due to the conflict, continuing to squeeze oil supplies and inflate prices.
The CMA study into the impact of the war on prices found that average petrol and diesel prices soared by 26p a litre and 50p a litre respectively between 20 February, a week before the conflict started, and 20 April.
It means the cost of filling the average 55-litre tank in a family car with petrol surged more than £14 and £28 for diesel over that period.
However, it added: ‘Retail fuel margins across the whole market were broadly unchanged between February and March at 10.3p a litre and 10.7p a litre respectively and were close or equal to the average margin in 2025 of 10.7p a litre.’
It said margins increased at a ‘minority of retailers’ but that it found no evidence this was due to profiteering and will investigate further.
It added that drivers could potentially save £9 per fill-up if they shop around for cheaper deals by using the Fuel Finder service launched by the government in February.
A Treasury spokesman said: ‘Motorists are paying more at the pumps because of the war in Iran.
‘This is not our war and that is why we did not join it. We are determined to keep costs down for motorists.’