Healey is urged by Labour's favourite think tank to hit motorists at the pumps

Labour's favourite think-tank has sparked outrage by calling on the Chancellor to make it even more expensive for motorists to fill up their cars.

Despite widespread pleas for John Healey to help families struggling with sky-high pump prices in next week's Budget, the Left-wing Resolution Foundation says Fuel Duty should be increased instead.

It says continuing the long-standing freeze 'should not be a priority' for the Government, claiming it mainly benefits the wealthy and the levy should be hiked every few months.

The think-tank, whose former chief executive Torsten Bell is now a Treasury minister, says: 'Ceding to demands to extend, yet again, the long freeze on Fuel Duty into next year is not the place to pour scarce resources.

'Instead, the aim should be to get Fuel Duty rising. "Little and often" should be the mantra here, with small, predictable increases ending years of fiscal fictions.'

The average price of diesel topped £2 a litre for the first time this month while petrol costs £1.75 in many forecourts as the Middle East conflict continues to disrupt production and supply.

Under current plans Fuel Duty is scheduled to rise by 3p a litre on January 1, with another 2p rise in March when a cut introduced by the Tories in 2022, and repeatedly extended by ministers since then, is due to expire.

A 16-year freeze in the levy is also scheduled to end next year, which would add 1p more in April.

It is widely expected Mr Healey will extend the cut and the freeze as part of his efforts to 'give Britain a bit of breathing space' amid a cost-of-living crisis.

But Resolution Foundation urges him not to do so, saying: 'Extending the Fuel Duty freeze is not a well-targeted measure.'

It claims 'higher-income households tend to spend more of their income on petrol and diesel than lower-income households' while the cuts have 'eroded revenues from driving and distorted incentives to use fossil fuels'.

It acknowledges ending both the cut and freeze, which would mean a 13 per cent hike between now and April, is 'unrealistic'. It suggests instead 'small quarterly increases', from 53p a litre now to 58p in 2028 and 66p in five years.

On Sunday Shadow Transport Secretary Richard Holden said: 'The claim that this is somehow fairness is out of touch with the reality for working people up and down our country who rely on their vehicles for work, to get the kids to school or visit loved ones.'

Howard Cox, founder of pressure group FairFuelUK, said: 'The claim that Fuel Duty freezes are not well-targeted ignores the reality that every product on every supermarket shelf has been transported by road.

'Higher fuel taxes do not just hit drivers, they push up the cost of food, deliveries, manufacturing, farming and services across the economy. For years drivers have been treated as a Treasury cash machine, paying tens of billions of pounds in Fuel Duty and VAT while receiving little in return.'