The government will freeze the 5 pence per litre fuel duty until September 2026, when it will be replaced by a 3 pence per mile for electric cars from 2028.
The change will cost £2.4bn next year and £900mn annually thereafter, according to the Office for Budget Responsibility.
The move, alongside the Fuel Finder scheme that provides drivers with live updates on fuel prices, is expected to save households an average of £89 next year.
The Budget also included wider cost-of-living measures, including support with rail fares and energy bills. The average household will receive £234 in energy assistance next year, according to the Resolution Foundation.
Last year, the OBR warned the total cost of freezing fuel duty from 2010-11 to 2025-26 would cost the Treasury £100bn.
“This budget leaves much of the fiscal repair job to 2028 and beyond. Economic winds could change dramatically between now and then,’’ said Ruth Burtice, chief executive at the Resolution Foundation.
