Luke Evans
Main Page: Luke Evans (Conservative - Hinckley and Bosworth)Department Debates - View all Luke Evans's debates with the Department for Work and Pensions
(1 day, 12 hours ago)
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Mr Holden
My right hon. Friend raises an incredibly important point. It is not just those who have a car who will be paying for this policy—although they will be paying the most—and it is not just those who rely on a van for their business or work to get around who will be paying; everyone will be paying, whether they use the bus or are just going to the shops. The truth is that everything has to be transported by road in this country. This tax rise will have huge inflationary pressures right across the board, not just for fuel, whether for heating or for road transport, but, as he is right to say, for so many other areas—areas that have not even been considered by the Treasury.
Dr Luke Evans (Hinckley and Bosworth) (Con)
All my right hon. Friend’s arguments stand, and that was true before the war in Iran. The Prime Minister stood there on Monday saying that the freeze is still in place, but the world has literally changed around us. Does my right hon. Friend share my concern that this Government are not being reactive and following the change? There will be a big impact and a knock-on effect, and the Prime Minister is touting this policy as though it is new, when it was in the Budget last year.
Mr Holden
My hon. Friend makes an important point. He will be aware that when the fuel price goes up, the Government’s VAT revenues from fuel go up at the same time. They are already seeing hundreds of millions of pounds a year extra in VAT, purely from the fact that the underlying price has gone up. My hon. Friend makes another important point, which is that this is a moment for the Government to reconsider. We on the Opposition Benches opposed this measure at the Budget, because we thought hitting working families was the wrong thing to do, but it is doubly the wrong thing to do when prices are also going up internationally.
Mr Holden
The hon. Lady raises an important point. As she suggests, the tax revenues from reopening the North sea for oil and gas could be spent in a number of ways, but we have to open the North sea—a cost-free and environmentally positive alternative—to obtain those revenues, and then we can consider all the different ways in which Members across the House would want to spend the money.
Since the Labour Government came to office, we have seen just how much they have hit transport across the country. The fuel duty rise of 5p a litre is just the latest example. First they abolished the much-loved £2 bus fare cap, which the Conservatives had pledged at the general election to continue for the entirety of this Parliament: they have put bus fares up by 50%. They have also jacked up airport business rates, by a staggering average of 295%. Who is benefiting from that? Certainly not passengers, certainly not the airlines, and certainly not British business. They have also raised air passenger duty, with passengers facing a 15% jump in one year alone, followed by permanent increases, year after year after year, of between 3% and 4%, just to get on to a plane.
In the last few weeks the Government have raised the price of railcards for the first time since—[Interruption.] Perhaps they would like to chunter about this one. Do you remember this one, guys? We hear nothing from them on this. They have raised those prices for the first time since 2013—the first time for more than 10 years. They have increased the price of senior railcards, veterans’ railcards, young people’s railcards. New taxes on people throughout the country are being raised by this Government. We are seeing a 16% rise for the first time since 2013, and they did not even know about it, because they do not care about young people, about old people, about those who are being affected by the tax rises that will be hitting people all over the country from September onwards.
Labour has also just introduced a new policy that will leave ferry passengers on the Isle of Wight facing bigger crossing charges: £30 more per crossing. That will hit family holidays in the UK, and it will hit people from the Isle of Wight who are just trying to go about their daily lives. Labour is stealthily—
Torsten Bell
I completely agree with the hon. Member that families up and down the country are worried about what they are seeing on their TV screens about the conflict in the middle east—maybe because they know people directly, but also much more universally about the effect on all of us and on their budgets—and they expect a Government who take a sensible approach, meaning that we protect household finances, which I will come to, as well as the public finances. That means taking decisions based on recognising the unavoidable uncertainty about how the future of the conflict plays out.
Torsten Bell
I am going to make a bit of progress, but I will give way soon, because Members have been very patient.
I was coming on to the fact that we are not in the business of delivering regime change from the air, but we do need to de-escalate the conflict and we will play our part in doing that.
Oil and gas prices remain below the peaks they reached in 2022 following the Russian invasion of Ukraine, but I do not want to hide the fact that, as we have just discussed, these are significant increases. Oil is up by 40% and gas prices have risen by around 64% since the end of February. The movement in energy markets we have already seen are likely to put upward pressure on inflation in the coming months—exactly as we have just discussed—but the ultimate size of the effects is highly uncertain. What is certain is that in the face of them, this Government will take the necessary decisions to help protect both household finances and, as I was just saying, public finances. I want to make it clear that, given the very real uncertainty, the policy and approach we are taking does give an assurance to households about how we will act.
Dr Luke Evans
That is good to hear. As it is under review, it sounds as if, should there be a change, the Government would look to support the British public, and I support that. Is there some kind of framework that the Government are using to make this decision? Is there a trigger point on fuel prices, or on how long petrol prices remain at that level? This relates to the previous question about budgeting. Are the Government using triggers, or is it just finger in the air and wait and see what happens?
Torsten Bell
I understand why the hon. Member is asking that. I would gently point out that the level of petrol prices today is lower than at the time of the election, when the Conservatives had a temporary 5p freeze and explicitly did not include continuing that freeze in their manifesto. I offer that by way of indication of where we are today.
We will keep working towards a swift resolution, one that brings stability back to the region, security to Iran’s neighbours and relief to households in the UK, who are understandably worried about the effect of the conflict.
Torsten Bell
This Government are showing that we care about the living standards of households up and down the country, and that is exactly what we should be doing. Encouraging all retailers to engage in the fuel finder scheme, which I will come to in a second, is very important. On heating oil, we had heard worrying evidence from people—I suspect the hon. Gentleman has, too, from his constituents—about the behaviour of some suppliers.
To further support competition in the market, we are introducing the fuel finder to ensure that petrol stations publish their live prices. That will make it easier for drivers to choose the lowest price. Since the beginning of February, all UK petrol stations have been asked to report price changes for petrol and diesel within 30 minutes.
Almost 90% of retailers have already registered. Last week, officials were instructed to accelerate the integration of fuel finder into major digital map applications, which will make it easier for drivers to use.
This tool sits alongside action to support households who rely on heating oil, as I just touched on. As the Prime Minister announced earlier this week, the Government will provide an additional £53 million of targeted support for the vulnerable households who would struggle to make an up-front lump sum to top up their tanks.
Dr Luke Evans
It sounds as though this support will be provided through the crisis and resilience fund, which replaces the household support fund. The problem is that many more people will not fall within that, despite seeing the price of heating oil double, if not triple—plus doubling the amount they have to order. What support is there for them? If those figures are going from £500 to £1,500 overnight, that will be a huge impact, and they will not get the £35 from the Government.
Torsten Bell
The hon. Gentleman is right, at least within England: yes, the funding will be delivered via local authorities, through the mechanism that was the household support fund, which becomes the crisis and resilience fund in a few weeks. We have written to local authorities to make it clear that they do not need to wait for the new fund to be in place and can start making commitments today. The decision on exactly who qualifies as vulnerable sits with local authorities, because one thing we have learned is that different parts of the country have different challenges on this issue.
Torsten Bell
I will make a bit of progress; I have already given way to the right hon. Gentleman.
To reflect the highly uneven geographical spread of heating oil reliance, as highlighted by lots of Members in recent weeks, not least those from Northern Ireland and west Wales, the funding will be allocated on the basis of census data, instead of via usual mechanisms.
I have focused so far on laying out the challenge facing the country and our consistent approach to this conflict, but as this is an Opposition day, it would be rude not to talk a little about the Opposition, who have displayed rank opportunism and incoherence. This week, the Leader of the Opposition has said that she is
“concerned that there isn’t a clear plan behind the strikes”,
which is the opposite of what she has been saying for weeks. She welcomed the strikes and the military action that she now says lacked a clear plan. She called for Britain to get involved in the military action that she now admits lacked clear objectives. She says that her leadership is about consistency, but, on this most important of issues, the whole country can see that she is just making it up as she goes along—a cavalier attitude without a second thought for the consequences for households here in the UK. She does not get to wrap herself up in another country’s flag and play politics with a serious conflict and then pretend she never did so once the consequences for those living in the United Kingdom became clear.
Opportunism is the word for the Opposition on fuel duty, too. For all the froth from the shadow Minister, the truth is that the previous Government did not budget for any extension of the 5p cut—they explicitly said that it was temporary. Here is the truth on the level of fuel duty: through their entire 14 years in office—
Torsten Bell
Wait for it; I am going to come to come to those 14 years. The hon. Gentleman is going to regret saying that. Through the Conservatives’ entire 14 years in office, fuel duty was never lower than it is today. In fact, it was higher than it is today for 80% of the time they were in office.
Siân Berry (Brighton Pavilion) (Green)
Our current and persistent reliance on oil for transport, rising costs as a result of instability in the middle east, and the ongoing fuel duty freeze, all have consequences for people who use any form of transport in their daily lives. I agree with the Government—and with the many Back Benchers who have joined in supporting them—that it is far too soon to consider the Conservative motion’s demand for further multiple and ongoing freezes.
The fact remains that ending the conflict in the Gulf and the wider middle east is the best way to ease fuel market price rises. The risk of profiteering by fuel providers is a far greater threat to household budgets than fuel duty collected for the public purse. The Conservatives should consider the consequences before offering their support for any more of President Trump’s appallingly badly thought-out decisions.
Dr Luke Evans
At what point would the Green party feel that we should step in to support those in rural communities? Green Members often say that the Government need to provide more support, but if we cannot de-escalate because this is not our war, how can we support constituents in Hinckley and Bosworth, in the hon. Lady’s constituency, and up and down the UK?
Siân Berry
My speech will continue to put the case for alternative interventions that will help everybody in every family in the constituencies mentioned.
Campaign for Better Transport has pointed out to the Chancellor that the total cost of cancelling all the planned increases to fuel duty in line with the retail prices index since 2011 has brought real-term cuts for motorists for 14 years, and cost the Treasury a cumulative £133 billion between 2011-12 and 2024-25. The additional 5p cut, meant as a temporary measure when introduced five years ago, has alone cost £13 billion since then.
The fuel duty freeze has been regressive. It has helped the richest tenth of households save nearly three times as much as the poorest tenth. The fact remains that the poorest people, who can afford no holidays whether or not the Government agree to this motion, are not driving or owning cars. Yet through all this time the cost of bus and rail travel, upon which those who cannot afford to own a car rely, has continued to rise.
Several hon. Members rose—
Dr Luke Evans
As the hon. Lady rightly points out, if someone is using alternative transport, such as buses, they are still affected by fuel duty—even more so. On top of that, the Government have already increased the cost of a bus ticket by 50%, so her argument does not hold water.
Madam Deputy Speaker (Ms Nusrat Ghani)
Order. If multiple Members are seeking to intervene, please indicate whose intervention you are taking. It makes it easier for the Chair to know whose name to call.
Melanie Ward (Cowdenbeath and Kirkcaldy) (Lab)
I thank the hon. Lady for giving way—I thought I would give her some further relief from the interventions from the manosphere on the Conservative Benches. She is talking about the importance of investing in clean energy to make our country more resilient and to do the right thing for the planet. Does she agree that doing that is often more cost effective for families as well? Just last week, I met with Fife Communities Climate Action Network in my constituency to talk about some of its great work to encourage and support insulation of people’s homes, for example. Does she agree that that is positive and that investing in clean energy—
Madam Deputy Speaker (Ms Nusrat Ghani)
Has the hon. Lady finished her intervention?
Melanie Ward
Does the hon. Member for Brighton Pavilion (Siân Berry) agree that investing in clean, green, home-grown energy is the way to ensure that we have energy security for our country in the future?
Dr Evans
On a point of order, Madam Deputy Speaker. I am grateful for the chance to make a point of order about the intervention made by the hon. Member for Cowdenbeath and Kirkcaldy (Melanie Ward). She labelled the Conservative Benches “the manosphere”. Do you, Madam Deputy Speaker, think that it is suitable to use sex as a pejorative just because there happen to be only male Members sitting on the Conservatives Benches at this point in the debate? I would envisage it being a problem if I used such a term the opposite way to label only females sitting on the Labour Benches.
Madam Deputy Speaker
Dr Luke Evans, you have most definitely got your point on the record. Unfortunately, the Chair is not responsible for the language used by Members—if only we were—but you have made your point and it is most definitely on the record. Siân Berry may wish to respond to that or to continue with her speech.
Dr Luke Evans (Hinckley and Bosworth) (Con)
I come here today with a mission. Unfortunately, for the past two years I have not followed closely enough the Labour party’s position on what the Government want to deliver. I have lost track of whether we are talking about pillars, aims, priorities, staging points, milestones or foundations, but at the start of the year the latest reinvention was a mission focused on the cost of living.
That was a slight change from when the Government first took office, because their main aim and their No. 1 priority at that point was to go for growth. Alas, as we have seen, that is not happening—the last figures say growth is 0%. What is more, it was evident that all the Government policies that were being put in place were actually anti-growth, as we are starting to see.
Tom Hayes (Bournemouth East) (Lab)
In a pithy sentence, will the hon. Gentleman describe the mission of the Conservative party?
Dr Evans
To win the next election, because then we can deliver the change that we are talking about.
On reducing the cost of living—the Government’s No. 1 aim for January—it seems bizarre that the measures that are being put in place have done nothing to support that. The Prime Minister went on the news on Monday with a five-point plan to deal with what is going on. He said energy bills would be capped, but we already knew that because it was announced in the Budget and the cap is in place until July. He said the fuel duty cap would be extended until September, but we knew that because it was in the Budget and then it is set to rise.
Melanie Ward
Will the hon. Gentleman tell us what the Conservative policy was in relation to fuel duty at the last election? By my recollection, it was that fuel duty would have been higher under the Conservatives than it is now under this Labour Government.
Dr Evans
The best way to decide how someone is going to behave in the future is to look at their past habits: we froze fuel duty for 15 years, and when a crisis hit in 2022 we reduced it. That is exactly the point that I was trying to make when the hon. Lady intervened. The Government have come up with a plan that is a talking shop and not doing anything. In response to the situation in Iran, they have simply reannounced what was in the Budget and further conversations with the CMA and the heating oil firms to work out whether they should or should not do something. That is precisely the point I am making: the rhetoric from the Government was “We are going to go for growth” but they then put in place some anti-growth policies, whereas now the cost of living is the No. 1 priority, but they are simply talking about that and making things worse.
Catherine Fookes
The Government are not just talking about it—we have put £53 million into supporting the cost of heating oil. That is doing something about it. When the Conservatives were in government, they took 200 days to do that.
Dr Evans
I am grateful to the hon. Lady for pointing that out because I was the energy PPS in the Home Office at that time, so I saw exactly how that worked, what it looked like and how difficult it is to put measures in place. Let me remind her that the Conservatives made a £200 unconditional payment to anyone who could claim that they were living off grid. That is a stark difference from this Government, who have put aside £53 million for the 1.5 million people across the entire nation who use heating oil because they live off grid—£35 per person. The Government have ringfenced that money, so it will only be available to the houses that are hardest hit, meaning that most households will not get any payment at all. That is the exactly the point I am trying to make: the Government talk a good game, but when it comes to delivery, they are not doing what they say.
Mr Luke Charters (York Outer) (Lab)
The hon. Gentleman is making some impassioned points about heating oil. I have a simple question for him: does he believe that the war in Iran increases the cost of heating oil or not, and will he reject the escalation that the Leader of the Opposition has called for in entering that war in the first place?
Dr Evans
Of course the war increases the risk. The Americans chose to go into that war and that is now having an impact on all of us. The question under debate is what are we doing about that and what measures are being taken. We are discussing fuel duty, which, as it stands, the hon. Gentleman’s Government will increase in September.
I have asked the Government to talk about the framework and the trigger points. I was glad to hear from the Minister that that increase is under consideration, but we need to know when that consideration will be made and what the trigger points are, because, as I rightly highlighted, we have seen all this before in 2022. We know what it looks like and we know how difficult it is to get to the canal boats, the park homes and the people living off grid.
The fifth point that the Prime Minister made earlier this week was about de-escalation, but he has no control over that if he says that he is not involved in the war. I am all in favour of de-escalation, but that is not a domestic policy that will bring down the cost of living—nothing tangible can come from that stance.
Why does this all matter so much? I live in and represent a rural constituency that is about 85% agricultural. We sit in the very heart of England, at the centre of the logistics industry. That means that every single day men and women from across Barwell, Earl Shilton and Donisthorpe get up, drive their vans, go out and drive their lorries, and support the economy.
Adam Dance
My constituent Sam works in a local haulage company. He tells me that the average profit margin for a company like his is 2%, while the cost of running a typical lorry has increased by 22%. Does the hon. Gentleman agree that the Government must support rather than damage this industry that we rely on to deliver essential goods, starting by cancelling the plan to increase fuel duty?
Dr Evans
The hon. Member is absolutely right. The Road Haulage Association has estimated that the fuel duty change will involve about an extra £2,000. On top of that, the change will hit the individual householder or car owner by about £140. The Government talk about making a difference, for example with the warm home discount or freezing energy prices, but those measures will already have evaporated given the very nature of the fuel duty escalation, on top of the prices that are rising because of Iran. People who work in the logistics industry are very susceptible to these fluctuations. It is right that we all want to move to electricity, but that is not going to happen immediately. I do not disagree with many of the arguments about the direction that we need to take, but the question is: what can we do now in the light of the reaction from Iran?
My constituents do not have the choice of walking or getting a bus, because we are a rural constituency and they rely on their cars. This increase will hit their cost of living by the very nature of the way it comes in. Let us contrast that with the 14 or 15 years of Conservative Government. That is usually the stock answer we hear from Labour Members. Gosh, 14 years! Yes, for 14 years we froze fuel duty because we recognised the impact it had on our households, on the white van man who is out working, on the delivery driver and on the lady who is driving from Hinckley to take a package up to Appleby Magna. Those people really need that support, and the change that we made and delivered had an impact.
Sir Ashley Fox (Bridgwater) (Con)
Does my hon. Friend agree that small businesses, not only in Bridgwater but across the country, were hit last year by the Chancellor’s jobs tax and have been hit this year by the additional burden of the unemployment Act and higher business rates, and that the prospect of higher fuel duty in September is disastrous not just for families who use their car for personal transport but for every small business?
Dr Evans
In true style, a knight of the realm recognises my very next point, because all these policies need to be set in context. Context is important, because each Government might need to raise taxes at some point, but here we have a toxic concoction of employment rights, more red tape, business rates going up and the support around business rates being taken away, fuel duty going up, national insurance contributions going up and the minimum wage going up. Any of those in isolation might be a good idea and might need to be done for support, but taken together they run against the Government’s milestones, mantras, missions—whatever they want to call them—on growth and the cost of living.
The pay-per-mile proposals for electric vehicles have been touched on, but I would like to expand on the issue. The proposals have brought huge consternation to many of my constituents. When I raised this issue straight after the Budget, I was blown away by the number of people from across the country who contacted me after seeing my question about how the proposals would work. There are simple, fundamental questions that the Government have not set about addressing. For example, what happens in the second-hand market? Who is judging when the mileage is being done? Are we likely to have monitors in our cars? That is meant to be done at an MOT, so what happens if I sell my car six months into it? What happens if someone lives in Northern Ireland and commutes to the Republic of Ireland? Where does the tax go then? What happens if we drive to Europe? For example, many people from my constituency like to take their caravan down to France for a holiday. Where do they pay their tax? How does that work?
The proposals are having the effect of stalling growth in the electric car market. Many people are saying, “I made the choice. I wanted to do the right thing for the environment and for my family, because that was a good decision to make”, but they are now regretting that decision, and the market is stalling as a result. I ask the Government how will that impact be felt in the context of fuel duty, and where will those measures fit into the framework of a continuing Iranian war?
To close where I started, I agree that in this place we can have a difference of opinion on when it is the right time to do something. I am pleased that the Minister said that everything was under consideration. That is really important for those listening outside. After all the Punch and Judy of this place on whose policy was right, whose was wrong and what has happened before, at the end of the day it is the families in Hinckley and Bosworth who will be looking at their budgets and at the uncertainty they see on the TV, and trying to decide what they should do.
I simply ask the Minister to outline what he would consider to be a trigger point for change. Would it be a certain price value for heating oil? Would it be a certain price value for petrol? Would it be a certain duration of the conflict? None of us knows when the conflict will end. All these questions could be addressed in a framework that we learned from during our time in government. In 2022, we had to come up with support schemes from scratch.
Mr Charters
The hon. Gentleman is right to draw attention to that 5p fuel duty cut at the height of the 2022 Russian invasion of Ukraine, but it was too slow. Will he remind the House of the level that diesel had got to at the pump when the 5p cut came in? Was it two quid? It was far too late, wasn’t it?
Dr Evans
Forgive me; I would be happy to give way again if the hon. Gentleman knows what the value was at that point. I do not know what it was because at the time I was working in the Energy Department trying to help support those households who were struggling and suffering, particularly those who lived in caravan parks, static homes and canal boats, who are off-grid and suffered by the very nature of where they got their fuel. He is right to say that we have to take this in the round. I have heard the Chancellor say that multiple times. How long will this go on? The decision is under consideration. I am not asking about when the decision is made or how to make that decision. This is more about understanding at what point we make those decisions and when the Chancellor decides that it is the right time to step in. It may well be that that decision was too late and that lessons could be learned. How do we know? That is the question I am posing to civil servants and this Government, because the hon. Gentleman’s party is now in charge of setting that out and deciding when is too long and when is too late.
I would argue that the current payment of £53 million is not enough for my constituents. Many of them will not benefit, because they will not be covered by the resilience fund. What the Government have done under the resilience fund—formerly the household support fund—is simply delegate the decision making to councils. Under the previous Government, when we were in charge, we chose not to do that because we wanted to support everyone who was struggling. It is this Government’s job to set out why they are not going to do that.
I would argue that keeping the fuel duty rise in September will create a terribly difficult time for any of us who drive cars or run a business that uses vehicles. Let us not forget that the energy price cap will change in July. The Government have rightly said that it is frozen until then, but the impact on prices will not come through the system until July, so we might well see prices and the price cap rise very quickly in July just as the fuel duty is about to come in in September. We are back to the point made by the knight of the realm, my hon. Friend the Member for Bridgwater (Sir Ashley Fox) about this toxic concoction of everything happening at once. I urge the Government to be aware of that and to set out the trigger points and the framework.
Robbie Moore
It is interesting that the hon. Gentleman has not turned up to this debate—a debate on an incredibly important issue that is impacting all of our constituents, including his—in good enough time to make a speech on the fuel duty increase, but wants to turn the debate back to a point that I answered in my response to the hon. Member for Cowdenbeath and Kirkcaldy (Melanie Ward). That point still stands. If the Government increase taxes on the hard-working businesses and individuals across the country who want to drive economic growth in order to benefit only a very few people, they are not providing opportunity for many young people and hard-working families across all our communities.
Dr Luke Evans
Back when we were in government, one of the ways we tried to solve this problem was by changing the universal credit cut-off limit from 63% to 55%, which meant that the more work people did, the more money they kept. That is exactly the way to support people back into work: making sure that they keep more of their own money. That incentivises work, rather than disincentivising it. Does my hon. Friend agree that there is an ideological difference here? We support work; the other option is just a handout.
Robbie Moore
I absolutely agree with my hon. Friend. By taxing families and individuals less, we provide them with more money in their pockets and we drive economic growth, as they have more of their own domestic spending power.
This Labour Government want to hit many businesses and individuals with three consecutive fuel duty hikes in a matter of months. If these proposals go ahead, motorists and haulage companies face being hit with the biggest tax burden in years. The road haulage industry is critical to our nation’s economic success: goods are moved around daily, and logistics are key to keeping our country moving. Everything we eat, drink, wear and consume depends on road haulage services—on companies such as Freightlink Europe. Road freight moves 81% of all goods, and 98% of all agricultural and food products are moved around the country by road haulage.
The Road Haulage Association estimates that a 5p rise in fuel duty will result in a typical motor vehicle-owning household spending an extra £100 each year and increase annual household spending by £1.9 billion, which is a whopping £7.3 billion over the rest of this Parliament. In my eyes, that is a significant additional tax burden for this Government to put on those households. At a time when the conflict in the middle east is pushing up inflation and the cost of petrol at the pump, it is beyond belief that Labour wants to push ahead with this fuel duty hike.
Greg Smith
The hon. Gentleman is late to the debate—we have been around that a few times over the course of the afternoon. The record of the Conservatives in government was to freeze council tax and freeze fuel duty—indeed, we cut it when we saw Russia invade Ukraine in 2022. Conservatives stand on a proud record of keeping fuel duty down, freezing it and cutting it. It is his party that, in government, is going to increase it on hard-working people this very year.
Let us be absolutely clear: this is a tax rise, a regressive tax hitting the poorest the hardest; a deliberate, calculated and, frankly, cynical tax rise phased in carefully in the hope that people will not notice. We have a rise in September—a back to school tax. We have another in December—a Christmas shopping tax. And then, in March, we have a spring clean of people’s wallets. Three moments in the year, three hits to working people.
Dr Luke Evans
It would be remiss of me not to point out that in July the price cap will be reviewed. Does my hon. Friend agree that there is a decent chance, given what is happening in Iran, that we may well see an increase in energy bills anyway?
Greg Smith
My hon. Friend, as usual, makes a clinically accurate point, and he is absolutely right to do so.
The truth is that the headline figure does not even tell us the full story. This is not just a tax rise; it is a tax on a tax. Fuel duty is applied first and then VAT is charged on top of it. So when the Government increase fuel duty, they are also increasing the VAT paid on that tax—a tax on a tax. That means that what they present as a 5p rise is not really 5p in practice, but closer to 6p at the pump—a hidden double tax built into the system, taking more from every driver, every business and every household.
We saw that argument tested just this weekend. The Energy Secretary was asked directly about the soaring cost of fuel and his instinct was simply to point to global events, external pressures and anything other than the decisions being made here at home in Whitehall. But he was confronted by a simple, undeniable fact: a breakdown of the price of a litre of petrol showed that fuel duty alone accounts for around 38% of the cost and, once VAT is added on top, that more than half of what drivers pay at the pump is tax—more than half.
Let us be clear: this is not simply about international markets or events beyond our control. Of course global factors play a role and of course wholesale prices fluctuate, but when over half the price at the pump is made up of taxes set by this Government, Ministers cannot hide purely behind external circumstances. They cannot blame global markets and ignore their own policy choices. And they certainly cannot claim to be easing the cost of living while actively increasing the tax burden built into every litre of fuel. The consequences ripple through the entire economy. Equally, when prices go up, including at the hands of the Chancellor, crime also rises. Already we are seeing reports from our hauliers across the country of fuel thefts taking place. That is serious.
Fuel is not a luxury; it is fundamental to how the country works. It is how goods get to our supermarkets, how tradespeople get to jobs and how carers reach the most vulnerable. When the cost of fuel rises, the cost of everything else rises—shops feel it, businesses feel it, families feel it—and it is, of course, inflationary. That matters not just for household budgets, but for the public finances. Around a quarter of the United Kingdom’s national debt—some £750 billion—is index-linked, so higher inflation means higher debt interest costs. In other words, this policy risks making the Government’s own fiscal position worse even as it makes life harder for working people.
The question is: what are the Government going to do, and why are they doing this? Why impose higher costs on drivers, businesses and families at a time like this? The answer lies in a failure at the heart of this Government’s approach: they have lost control of welfare spending. Instead of taking the difficult decisions required to ensure that welfare spending is sustainable and properly targeted, they have allowed costs to rise and rise. Now, having failed to grip that challenge, they are asking working people to pick up the bill. We have already seen tax increases on jobs, family businesses, our high streets and our farmers; this is simply the next step. Drivers are being asked to pay the price for the Government’s failure.
There is a different approach. In government, the Conservatives understood the pressure that fuel costs place on households and businesses, which is why we cut—I repeat, cut—fuel duty, froze it year after year, and stepped in again when global pressures caused prices to spike. We recognise that Governments do not balance the books by making it more expensive for people to go to work or to set up or operate a business and do not hide tax rises within the price at the pump. No one can create a system where people are taxed twice—once through fuel duty and then again through VAT applied on top—and call that fair. This policy fails the basic tests; it is an unfair tax. We Conservatives will oppose this unfair tax rise, and any Member who cares about what our constituents are paying at the pump will surely vote for our motion tonight.
The Exchequer Secretary to the Treasury (Dan Tomlinson)
I thank hon. Members for their contributions throughout the debate. I thank the hon. Member for Mid Buckinghamshire (Greg Smith) in particular for his winding-up, as well as the Tory Whips for giving me the opportunity to remind the House of his support for Liz Truss as PM. My Parliamentary Private Secretary, my hon. Friend the Member for Hastings and Rye (Helena Dollimore), has just passed me the 10 reasons the hon. Gentleman set out for supporting Liz Truss for PM—I do not know whether that is something he now regrets.
I will turn to the serious matter at hand. We are debating this issue at a time of significant international uncertainty. As the House is aware, we are now in our third week of the conflict in Iran and across the middle east. As the Prime Minister has made clear, our priority will always be the national interest through protecting British nationals and supporting our allies.
This Government recognise that the conflict is not just a matter of foreign policy, and that it also has direct consequences for individuals and families here in the UK. Movements in global energy markets are likely to put upward pressure on inflation, and the longer this conflict continues, the greater the risk it poses to both economic stability and the cost of living in the UK.
That is why the Government are clear that rapid de-escalation remains the best way to protect people from further fuel price increases. We are working with our international partners to support efforts to secure key energy routes and guarantee the security of vessels passing through the strait of Hormuz. We are also supporting a co-ordinated release of collective International Energy Agency oil reserves, the release of which has helped to stabilise international oil markets.
Dr Luke Evans
The Minister is right to talk about de-escalation and look to the international side, but, as I raised in my speech, there are domestic factors at play here too. What are the Government doing to set out a timeline to make these decisions and assess their implications so that the country can plan around what may or may not be going on? We do not know how long this will go on. What points are the Government looking at to make and inform their decisions?
Dan Tomlinson
I will come on to talk about fuel duty; I was just setting out the context at the opening of my speech.
The Government’s approach is to focus squarely on the British national interest and the economic interests of British households. The Opposition have clearly taken a different approach, choosing instead at times to egg on military action, focusing more on posturing and trying to get one up on the Government than on looking after our own at home and abroad.