Finance Bill

Robert Halfon Excerpts

Monday 2nd July 2012 Commons Chamber

[Miss Smith]

I share the concerns that many have raised about driving, the cost of living, and the challenges of running a business. Although the cost of fuelling a vehicle has recently eased as global oil prices have fallen, it is still a very important part of the overall cost of living. That is why the Government have announced that we will provide further support to motorists regarding the cost of fuel by deferring the 3p per litre duty increase that was planned for this August until January next year. That will mean that this Government will have kept fuel duty frozen for a total of 21 months since our decision in the Budget 2011 to cut fuel duty by 1p per litre.

[Robert Halfon (Harlow) (Con)]

I am grateful to the Government for moving on this issue, as will be many motorists across the country. Will my hon. Friend confirm that, because of what the Government have done, fuel duty will be 10p lower than it would have been if we had followed Labour’s plans?

[Miss Smith]

I shall certainly confirm that. It is testament to the repeated action that this Government have taken to support motorists that that is indeed the case.

--- Later in debate ---

[Miss Smith]

I shall say two things in response to that. First, as a result of all the actions that this Government have taken, including what we have had to do on VAT, the price of petrol and diesel at the pumps is still lower than it would have been under Labour—whose Members are, on the whole, absent today. Secondly, the decision that we are legislating for today combines our determination to help families with the necessity of keeping Britain safe in the global storm and with our credible plan to deal with the country’s debts.

[Robert Halfon]

Does my hon. Friend agree that the Opposition’s support for a cut in VAT is rather a misnomer, because not only would it cost £12 billion, but the vast majority of businesses who need to get their petrol prices down do not pay VAT?

--- Later in debate ---

[Cathy Jamieson]

I acknowledge that the hon. Member for Harlow (Robert Halfon), to whom the hon. Gentleman is referring, did a lot of work on the campaign. However, given the earlier suggestions that there was a lack of interest in this subject on the Opposition Benches because of the lack of numbers here tonight, I felt it important to lay out our case fully. I hear what the hon. Gentleman is saying, however, and I will bring my remarks to a conclusion.

I want to ask the Minister some specific questions. Now that the Treasury has had a week or so in which to do the number crunching—if it had not already done so—what areas of departmental underspend have now been identified to ensure that the decision to delay the August 2012 increase in fuel duty will be met in a fiscally neutral way? Will the Minister also tell us which Departments have, through budget exchange, already surrendered an underspend in advance of the end of this financial year, and which Departments are expected to have greater than originally forecast savings in departmental spending in 2012-13?

I do not have time to comment on the points that have been raised about biofuels. Perhaps I shall be able to do so in another debate. In conclusion, however, I should like to refer Members to new clause 9. We shall not be pressing it to a vote this evening, but it calls for a review of the relationship between fuel duty, other taxes charged on road fuels, and the cost of road fuel. It was made clear in the recent Westminster Hall debate that such a review might reflect the views not only of the Opposition but of many Government Members —I see some of them nodding—and I hope that the Government will be good enough to listen to that proposal, and to come forward with a plan to establish such a review.

[Robert Halfon]

I am grateful to have the opportunity to speak, and I support the Government’s new clause. I hugely welcome the support of my colleagues, particularly that of the hon. Member for Dundee East (Stewart Hosie), who did so much work with FairFuelUK and attended the Westminster Hall debate to which the hon. Member for Kilmarnock and Loudoun (Cathy Jamieson) referred.

The case for cheaper petrol is economic, social and moral. It is economic because the AA says that keeping 3p off fuel prices will pump £1.8 million into our economy every single day. That supports high street demand at a time when it is collapsing in Europe. It is social, because fuel duty is a tax on everything, and we should be honest about who is paying it. We talk about “motorists”, but they are not a special interest lobby group. As FairFuelUK and many hon. Members have shown, motorists are everyone: mums driving to school, children on the bus, pensioners hit by inflation. That is why this is an issue of social justice. The economy is important, but it is only half the argument.

The case is moral, too, because as I have set out in other debates, fuel duty is regressive. The Office for National Statistics said last year that it hits the poorest twice as hard as the richest. Fuel prices are now, in essence, a poverty trap, adding to our dole queues. The average motorist in my Harlow constituency pays £1,700 a year to fill up the family car—that is a huge amount and clearly unsustainable.

Opposition Members have spoken of a U-turn, but I would say that it is an L-turn, showing that the Government have listened, and I believe that the Government deserve huge credit for doing so. When I spoke to my constituents at the weekend, no one said that this was a U-turn or wondered when it was first mentioned or by what Minister when and why. Rather, they said thank you to the Government for listening to motorists.

The Chancellor, the Economic Secretary and her predecessor, who is now the Transport Secretary, have done more to cut fuel taxes in two years than the Opposition did in a decade. The 2011 Budget saw Labour’s rise cancelled and fuel duty cut by 1p, while in last year’s autumn statement Labour’s January rise was scrapped after the campaign by FairFuelUK and MPs. Then, last week, the Government delayed Labour’s August rise. This is a radical tax-cutting agenda, targeted in a way that helps the poor. It shows that the Government are on the side of the little guy, supporting aspiration and hard work.

I listened to the “Today” programme interview with the shadow Chancellor, and I say to the hon. Member for Kilmarnock and Loudoun that this is not a decision made in a day. I and many others have been to see Treasury Ministers over many weeks and have led delegations to see relevant Ministers. I knew that the Government were considering this issue for a long time.

[Cathy Jamieson]

I thank the hon. Gentleman for making those points. If those discussions were going on for that length of time, would he not have expected the Government to say how it was going to be paid for?

[Robert Halfon]

In the Westminster Hall debate, which the hon. Lady mentioned, the Economic Secretary did not give a view either way on the issue and said that the Government were looking at it. Ministers then came to the House for Treasury questions. What better way of informing us that they were going to stop the August rise?

Returning to the “Today” interview with the shadow Chancellor, he said that Labour had “acted” on petrol prices, but a House of Commons Library note says:

“From 2000 the Labour Government increased road fuel duties...In its 2009 Budget the Labour Government announced that in future years fuel duties should rise by 1p a litre above inflation.”

In the next Budget, they

“proposed that the escalator should apply at least until 2014/15”,

and that

“the increase set for 2010/11 would be phased in over the coming tax year in 3 stages...fuel prices continued to rise strongly, driven by this increase in duty rates”.

That is the record we inherited, and which we are now having to unwind.

[Sarah Newton]

Will my hon. Friend give way?

[Robert Halfon]

I apologise, but I cannot, as I have to allow time for the Minister to respond.

There are still problems: fuel is still at around £1.30 a litre, which is unsustainable. As the RAC has said, duty revenues are shrinking every year, as people are driven off the roads. We must stop seeing cars as a cash cow.

I accept that the Government can only do so much. We are always held hostage by the international oil price. As has been noted, however, pump prices are quick to rise, but it feels as though we need a court order to get them down. Evidence shows that from May to August last year, oil prices fell by 5.5%, but petrol and diesel stayed high, falling by just 1.5%.

The Office of Fair Trading has said it will not investigate the UK oil market. I am petitioning the Backbench Business Committee to table a motion so that Parliament can urge the OFT to investigate that market, which clearly looks uncompetitive and unfair to many people.

Finally, there is the problem of local variation in petrol prices, especially in rural areas, but also in towns like Harlow. Harlow residents often write to me, saying that fuel is 5p cheaper only a couple of miles down the road, and there is no explanation for it, other than a lack of competitiveness. Germany, Austria and America have initiated fuel price regulation to limit price rises. We should be doing the same thing.

In conclusion, the Chancellor and the Economic Secretary have given Harlow families and many millions of motorists across the country at least six months’ breathing room, and I welcome that. I urge the Government to look seriously at the long-term cost of fuel and petrol, and see what else they can do. I also urge them to put pressure on the OFT to do a market study. I will vote wholeheartedly for the Government’s new clause, and I urge the House to join me.