Cut UK speed limits to reduce Iran war impact on consumers, thinktank urges

A leading thinktank has urged the UK government to impose lower speed limits and a new energy price cap to shield consumers from soaring oil prices triggered by conflict in Iran [1]. The IPPR warns inflation could otherwise peak at 5.8% [1]. The Institute for Public Policy Research (IPPR) proposes capping legal speeds at 20mph in towns and cities and 60mph on motorways to reduce fuel demand [1]. Ministers should also temporarily cut fuel duty by 10p and introduce a new, automatic energy price cap of £2,000 a year, which would trigger if regulator Ofgem's quarterly estimates exceed the current £1,641 cap [1]. "The UK cannot afford to sit back and let another energy shock drive up inflation and damage the economy," said William Ellis, a senior economist at the IPPR [1]. The thinktank argues lowering speeds would be a dual win, cutting fuel demand while making streets safer for walking and cycling [1]. Such a measure could prove controversial, as seen in Wales where a 2023 default 20mph limit was opposed by more than half of residents despite an over 10% fall in road casualties [1]. The researchers estimate the Treasury could lose up to £8bn a year from higher debt payments and lower tax revenues without a support package [1]. While the proposed policies would cost up to £5bn a year, the IPPR notes this is far less than the £76bn cost of the 2022 energy crisis response [1]. The package would also reduce peak inflation by up to two percentage points, potentially averting interest rate rises [1]. Bank of England Governor Andrew Bailey recently warned, "The longer this problem goes on... the more difficult the scenario we’re in" [1]. Ellis concluded the government could act where the central bank cannot, stating, "At worst, this would save about as much as it costs – but if permanent damage or sharp interest rate rises are avoided, this could end up saving money" [1].