The Prime Minister’s chances of survival risk going up in flames if he cannot scrap one looming increase.

The Prime Minister and the Chancellor need to show they have a plan to cope with the energy shock (Image: PA)

The Prime Minister and the Chancellor are on a collision course over one of the most incendiary subjects in Britain – the price of petrol. Sir Keir Starmer knows disaster looms if drivers see him as the man who priced them off the road. The Iran crisis has sent petrol costs rising at the fastest rate since Russia’s invasion of Ukraine, and the 5p cut in fuel duty in the wake of that war is due to be phased out from September.

The Labour leader has made getting the cost of living down the central mission of his Government. He cannot stand by and watch fuel costs hit unprecedented heights, and he is already under attack for refusing to rule out the duty increase. Nigel Farage this week rebranded a petrol station with the Reform UK logo and pledged to reverse the duty hike. Kemi Badenoch kicked off Prime Minister’s Questions by asking Sir Keir why he thought now is the right time to increase the cost of petrol.

This is poisonous territory for a prime minister fighting multiple fires. He was already on course to suffer a salvo of humiliations in a raft of elections in May – but Labour could face a wipe-out if petrol prices keep going up and each week Sir Keir refuses to scrap the cap. What is stopping him? This week he hinted that a U-turn might be possible, pledging to “keep the situation under review in light of what is happening in Iran”. Why not go further?

The challenge is the Chancellor. He knows that if he stands up and announces the duty hike will not go ahead he will trigger an eruption on a Vesuvian scale at the Treasury. Rachel Reeves said on Wednesday she was “loath” to change plans. Preserving the Government’s economic credibility is her paramount priority; she will not want to tear up her financial plans because her next door neighbour in Downing Street is getting shouted at by Mr Farage and Mrs Badenoch.

She has fought to keep the confidence of the markets and Sir Keir’s talk of reviewing this policy – just a week after she delivered her spring statement – has already triggered claims of a split between the PM and the Chancellor.

Ms Reeves told MPs it is “much too early” to “guess where petrol prices will be” in September. But even if Iran is no longer striking ships in the Strait of Hormuz by the send of the summer, there is a high chance that drivers will still face punishment at the pump.

In the United States, the energy department has warned prices are unlikely to fall to pre-war levels until the middle of next year at the earliest.

If the British Government is going to have to U-turn, why not do it as soon as possible? Labour has suffered immense political damage by sticking with policies for many months before surrendering in the face of public anger.

The PM faces disaster if he is blamed for forcing motorists off the road (Image: Getty Images)

According to analysis by Politico, 419 days passed before the “family farm tax” was overhauled; 315 days before mass eligibility for winter fuel payments was restored; 491 days before the U-turn on the two-child benefit cap. Surely the lesson for the PM is to summon the press to Downing Street and announce that due to his passionate commitment to helping struggling families with living costs – and his deep appreciation that in places far away from North London a car is indispensable – and the unique challenges created by Donald’s Trump’s attack on Iran, the fuel duty cut will stay in place.

He has the chance to cast himself as a pragmatic leader who understands the financial pain facing households across the country. This may seem a no-brainer but the Treasury exists to collect tax. It is packed with people with very big brains who are fully aware of the fragility of the nation’s finances in this era of minimal growth.

Ms Reeves does not like what she sees when she looks at an industry she thinks is in need of a shake-up. She told MPs she wanted a “properly functioning market where customers have decent information about prices at different petrol forecourts rather than subsidising the money which often goes straight to the retailer”. The Prime Minister probably agrees with her but he will dread the thought of standing up each week in the Commons to deny, as he did on Wednesday, that his Government is “increasing the cost of petrol”.

Keir Starmer and Rachel Reeves’s fortunes are joined together (Image: Mark Radford/Sunday Mirror)

Opposition parties will relish the spectacle of a civil war between Sir Keir and Ms Reeves, each of whom already suffers spectacular unpopularity in the country.

If the PM overrules his Chancellor her fiscal rules will look like vague guidelines, her authority will be undermined, market confidence will suffer and his own backbenchers will be emboldened to press for more U-turns.

The Government faces the ghastly choice between showing empathy with the public or projecting stability to the markets. Do they want to look heartless or weak?

Ms Reeves may well seethe if she is presented as the villain in this drama, hoarding cash while the PM champions hard-pressed motorists.

But the pair need to come up with a coherent plan for how Britain will weather this latest energy shock. Trust in the Government will utterly evaporate if a flailing administration descends into feuding. When it comes to public goodwill, the tank is already empty.