Currently, it is the Treasury’s policy to increase fuel duty in line with inflation each year. Because it is official government policy, the OBR assumes that an annual inflation-linked increase to fuel duty will occur.
However, governments have consistently not raised fuel duty with inflation, despite such an increase being part of the Treasury’s underlying policy assumptions. The OBR therefore considers fuel duty a risk to its fiscal forecast.
This matter has been discussed by a Treasury committee who have recommended this policy assumption be removed from future forecasts.