Fuel Prices

Sammy Wilson Excerpts

Tuesday 15th November 2011 Commons Chamber

[Mr Brian H. Donohoe (Central Ayrshire) (Lab)]

rose—

[Sammy Wilson (East Antrim) (DUP)]

rose—

[Andrew Griffiths]

I will not give way again; I have given way a few times.

I must tell the House what motorists and families in my constituency tell me about the high price of fuel and how it is impacting on them. They, like the constituents of many right hon. and hon. Members, are suffering because they have had pay freezes and, in some cases, pay cuts, because of inflation, and because they have had to cope with large rises in electricity and gas prices. So spiralling fuel prices are starting to impact on their quality of life, and on their ability to survive in these difficult times.

More than one constituent has told me recently that they have had to choose between doing regular maintenance on their vehicle and filling it up every month to get to and from work and to pick up the kids. We have to look at the impact, because our constituents have only so much to spend on motoring every month and every year, and, if we do not do something to help them soon, they will have to find savings elsewhere, and that could affect road safety.

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[Sammy Wilson (East Antrim) (DUP)]

I welcome the opportunity to speak in the debate, because the price of fuel is an important concern for many of our constituents. I will start with two observations. First, I am glad that there has been little evidence today in the House of the green zealotry that drove the increase in fuel prices—a point we must not forget, because it was argued that that was a way of weaning the population off fossil fuels. Secondly, although Members have talked about the role of petrol and oil companies, let us not forget that 60% of the cost of fuel is accounted for by Government action. Therefore, this is the appropriate place to debate what can be done about it.

The Government’s record on this differs from what they said in opposition. They had many fine ideas in opposition. Indeed, in “A Fair Fuel Stabiliser” they indicated that any reform should help families when the cost of living is rising and reduce the inflationary impact on the economy—but what has the record been since they came into power? In Northern Ireland, fuel bills for families have increased by an average of £254 a year for those using diesel and £284 a year for those using petrol. The Government promised in opposition to do something for families when the cost of living was rising, but their actions have been different.

They made clear in opposition what they thought about an increase in VAT. Indeed, in an intervention in this House in 2008, a Conservative Member asked the then shadow Chancellor:

“Does my hon. Friend not agree that Labour’s plans to increase VAT to… perhaps even 19.5 per cent…. after the next election will hit hard-working families hardest? Should the Government not be ashamed of themselves?”

The answer was “absolutely”, and that the Conservatives would keep reminding the then Government of that

“every…day between now and the…election.”—[Official Report, 26 November 2008; Vol. 483, c. 741.]

The Conservatives did that, but as soon as the election was over and VAT went up to 20%, it all went quiet on the Government Benches, and we did not hear much from them about VAT hitting the poorest families hardest.

During this debate, Government Members have said, “Ah, yes, but we reduced fuel duty.” On the one hand, fuel duty was reduced; on the other, VAT was put up. The Chancellor gave, and the Chancellor took away. That is the truth for hard-working families.

[Jim Shannon]

I thank my hon. Friend for his passionate speech. As he represents a rural constituency similar to mine, has he been contacted by farming communities regarding the effect of fuel prices on food production, which affects everybody in the country? There is the price of the fuel for their machinery, but the increased fuel prices also get passed on to them in the price of fertiliser and other things that they use on the farm. Is he concerned about that, and about its impact on food prices?

[Sammy Wilson]

That just illustrates the inflationary impact of the situation, not just on individual families but throughout the economy, and the Government ought to bear it in mind as they ask themselves, “What shall we do to regenerate the economy?”

Various reasons why it is difficult to do something have been given. The first, which we have heard from Government Members, is that if we try to reduce VAT Europe will intervene. That is another reason for renegotiating our position on Europe—but leaving that aside, I note that 75% of the tax is not VAT but fuel duty, so even if there is a problem with Europe, the Government have another way of dealing with the problem.

The second reason that has been given has involved asking, “What about deficit reduction?”, but there does not seem to have been any difficulty with deficit reduction when it has come to bailing out the euro, with £12.5 billion having already been pumped into it and the Government talking about more money going to the International Monetary Fund. Indeed, as Government Members have said, the measure could almost be self-financing anyway: if, for example, it led to a rise in demand, there would be more duty; if it cut costs, more corporation tax would be paid.

[Mark Durkan (Foyle) (SDLP)]

Does the hon. Gentleman recall that previously, whenever the Scottish National party or Plaid Cymru moved their various motions, Labour voted them down and the Tories abstained, and then the Tories voted them down and Labour abstained? Does he believe that there must be something particularly volatile in fuel prices on the road to Damascus to bring about such changes in outlook?

[Sammy Wilson]

I believe in Damascus road experiences, and if they help the consumer that is a good thing, so I look forward to that. I hope that the Government will have a Damascus road experience on this issue. Consumers would be pleased if they did.

In opposition, the Conservatives made promises. Now that they are in government they hold in their hands the levers to help consumers, and from this debate will come the expectation that promises made in the past will be delivered by those who hold the levers and have the ability to use them in the present.

Oral Answers to Questions

Sammy Wilson Excerpts

Tuesday 1st November 2011 Commons Chamber

[Mr Gauke]

May I just make the point about the 1945 Government that they were running surpluses from 1948 onwards? If memory serves, the debt in 1945 was 232% of GDP and by 1951 it was 178% of GDP, so they brought debt down. That is not a bad thing to do and this Government want to do it, whereas the Labour party wants to put debt up.

[Sammy Wilson (East Antrim) (DUP)]

Given the increase in debt caused by the lower growth rates and the impact that that is likely to have on the Government’s deficit reduction plan, what impact does the Minister believe that will have on the United Kingdom’s credit rating? Does he believe that steps need to be taken to inject growth into the economy?

[Mr Gauke]

It is worth pointing out what Standard & Poor said recently when it confirmed our triple A credit rating. It said that if we abandoned our fiscal plans—if we borrowed more—that credit rating would be at risk. The best way of keeping our triple A rating is by sticking to the plan.

Arch Cru Compensation Scheme

Sammy Wilson Excerpts

Wednesday 19th October 2011 Westminster Hall

[Tom Greatrex]

The hon. Gentleman is right to say that Capita group is involved in a range of businesses across the world. Capita Financial Managers, however, was regulated by the FSA and was supposedly in a position to provide assurance in this case. That is where questions need to be asked.

[Sammy Wilson (East Antrim) (DUP)]

The hon. Gentleman makes the important point that whatever management inadequacies there may have been in Capita, it was regulated by the FSA. It oversaw what was supposed to be a prudently managed fund. Money was being put into totally illiquid assets and very dodgy assets, yet that was never identified. Was there not a regulatory failure in that regard?

[Tom Greatrex]

The hon. Gentleman makes an important point. I want to come on to the role of the FSA as the regulator and I particularly want the Minister to respond on the potential role of the Financial Conduct Authority in the future as the FSA is wound up.

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[Alun Cairns]

I pay tribute to my hon. Friend for the role he has played in uncovering many of these issues. I will come on to the Serious Fraud Office in a moment.

[Sammy Wilson]

I accept the hon. Gentleman’s defence of the independent financial advisers. None the less, the only interface that many investors have is with an independent financial adviser. Is there not an obligation upon them at least to check out the funds on which they advise? Is there not some responsibility there?

[Alun Cairns]

I am grateful for that valid point. Clearly, IFAs cannot be excluded from all responsibility, but we need to bear in mind the context in which they are working. If they are looking at the strategy and pricing of a fund classified as cautious managed, we need to recognise the context in which that advice is being given. Therefore, the failure of the FSA to set the right context in which an IFA can make recommendations is fundamental to the issue.

There is another conflict. The FSA regulates the authorised corporate directors and Capita acts as the authorised corporate director for more than 300 firms. Taking action against Capita could create difficulties, leading to panic in the marketplace. The FSA has powers under section 166 of the Financial Service and Markets Act 2000 to instigate an independent investigation into organisations that take such responsibilities. Will the Minister tell us whether any such action has been taken by the FSA?

The Arch Cru affair is a minefield of accusation and counter-claim. My hon. Friend the Member for Hexham (Guy Opperman) referred to the Serious Fraud Office. I was alarmed to discover that two of the three main directors or partners who established the Arch Cru funds—Robin Farrel1 and Robert Addison—are still operating, albeit under a new name of Arch Global. Allegations have been made to the Serious Fraud Office about how Arch funds were invested in a property company with common directors. Student accommodation was bought on the open market at one price, only to be sold to the Arch investors shortly afterwards for an inflated sum. I have no knowledge of whether or not those points are true, but they clearly need to be investigated.

As for compensation issues, the auditors and the Guernsey Financial Services Commission certainly need to be pursued by some authority, be it the FSA, the Minister or other parties.

Finally, in view of the FSA’s actions and the associated conflicts, I am troubled that section 404 of the 2000 Act can bind the financial services ombudsman to the FSA’s judgment on the level of compensation. The FSA has made its view of the 70% figure quite obvious in its statement. Therefore, even if investors seek to make a claim involving the financial services ombudsman, or if they follow other routes, the FSA can limit the compensation to 70% at a later stage.

Jobs and Growth

Sammy Wilson Excerpts

Wednesday 12th October 2011 Commons Chamber

[Sammy Wilson (East Antrim) (DUP)]

I will not tax your brain, Mr Deputy Speaker, by getting you to guess about job creation or anything like that; I would like to make just a couple of points.

First, I sometimes approach a debate such as this with a degree of unease. There is always a tendency either to pretend that there is no problem because the existing policy has to be defended or else to magnify the existing problems and in doing so to have an impact on confidence. One thing I have found from speaking to business people in Northern Ireland is that although we are going through difficult circumstances, which everyone recognises, there is no point in further impacting on consumer and investment confidence by, through political point scoring, making the situation appear worse. We need to try to avoid that in a debate such as this.

Secondly, I have looked at the statistics on Northern Ireland and found that we have seen no growth in the economy over the past 24 months. We have had an increase in unemployment and, of course, given our heavy dependence on the public sector, the public spending cuts of £4 billion over the next four years—40% of the capital budget—are bound to have a deflating impact on the economy.

In listening to today’s debate, to the Chancellor’s reaction and to some of the Opposition’s proposals, we have to consider whether the rigid battle lines that have been drawn are of benefit to the economy in the long term. I accept what the Chancellor has said today—there is considerable risk in changing position—but any economic strategy is bound to carry risk with it, as it involves trying to project and look into the future on the basis of many different variables, such as how markets will react and what will be the impact of a decision. We do not have perfect knowledge about those things, so sticking rigidly to the current plan carries a risk.

We do not know how the markets are going to react to the increased borrowing that will be required as tax revenues fall and spending on unemployment and other benefits rises. Currently, the markets seem prepared to accept that there might well be an increase in the deficit because of what is happening, but that the Government are still on plan to reduce the deficit. Where is the tipping point when the markets begin to say, “Do we really have a credible plan?” Equally, if we go down the path of increasing spending and reducing taxation, at what stage will the markets say, “You are deviating from the plan”?

One thing that I suppose has come out of the debate so far—at least from the IMF, the OECD and even some of the credit agencies—is an acceptance that there can be some flexibility. Even the Chancellor is beginning to accept that demand in the economy needs to be stimulated. I suppose his attitude and approach to quantitative easing is an indication that he sees demand stimulated by monetary policy but equally that good fiscal policies and ideas may also be considered as a means of trying to stimulate growth. I am not so sure, when I look at what is happening to bank lending in Northern Ireland, that quantitative easing is having an impact. The British Bankers Association has published its quarterly figures. From the last quarter of last year to the second quarter of this year, bank lending to small businesses fell by 30% in Northern Ireland. With the Chancellor telling us that there is sufficient liquidity in the banking system, one has to ask whether simply making money available is going to be the answer.

Some fiscal measures have been suggested here today. It has been suggested that we need not increase spending and reduce taxes to create extra demand. Instead, we could direct extra spending towards the activities that create the biggest multiplier effect—for instance, spending on housing and reductions in VAT, whether for extensions to houses or for the tourist industry. There are measures that do not cost a penny, such as reducing regulation. I welcome the Chancellor’s announcement that he will not stick to the carbon reduction targets. As one who voted against the Climate Change Act 2008, I am pleased to observe that some reality is now entering that debate. Why should we impose a 40% increase in energy costs on our industry when that is not being done elsewhere, with the aim of reducing carbon emissions into the atmosphere and thereby somehow or other affecting the climate?

There are many suggestions to be considered. I believe that the Chancellor has more leeway than he claims, and I hope that we shall see some movement as a result of today’s debate.

Oral Answers to Questions

Sammy Wilson Excerpts

Tuesday 6th September 2011 Commons Chamber

[Mr Gauke]

I am delighted that one of the two enterprise zones in the south-east local enterprise partnership will be in my hon. Friend’s constituency of Harlow; 100% of business rates collected on the Harlow site will be retained for 25 years and are to be spent on local economic priorities. This will be possible from April 2013, once the necessary legislation is passed. Businesses will also benefit from simplified planning and Government support to ensure that superfast broadband is rolled out throughout the zone.

[Sammy Wilson (East Antrim) (DUP)]

One proposal subject to consultation, which has now finished, for reducing costs in Northern Ireland is the devolution of corporation tax so that the rate can be reduced for that part of the United Kingdom. Will the Minister assure us that the devolution of corporation tax will not be set at a price that makes it impossible for the impact on the economy to be positive?

[Mr Gauke]

As the hon. Gentleman said, the consultation process is now completed. I know we will be in contact with the Northern Ireland Executive to discuss the results. No decisions have been taken, but we have clearly made progress in this area. I look forward to having future conversations with the hon. Gentleman, including about the particular issue of cost that he mentions, but it is right for the cost as well as the powers to be properly devolved.

Finance (No. 3) Bill

Sammy Wilson Excerpts

Tuesday 26th April 2011 Commons Chamber

[Danny Alexander]

No, I do not accept that we have got this wrong; I think we have got it right. The level of the carbon price floor was set out in the consultation. A range of options were given, and we have taken a mid-point of the various responses we received. I think it is right that this country is the first country to introduce a carbon price floor. That is a very important mechanism to help us deliver on the low-carbon power generation to which I thought those on the hon. Gentleman’s side of the House were as committed as we are on this side. Of course this will have an impact; it is designed to have an impact. It is designed to have the impact of ensuring that companies and industries seeking to invest in low-carbon power generation have a clear sense of certainty about the price they will receive for that energy over future years. As a result of that, our country can ensure that we deliver on our targets for renewable energy and carbon emissions reduction, which are, I hope, very important to every Member of this House.

[Sammy Wilson (East Antrim) (DUP)]

Does the right hon. Gentleman not see any contradiction in terms in what he has said about making industry more competitive by giving it tax breaks? Introducing a carbon price floor will take more money from industry than corporation tax reductions give to it. Does he not recognise the point made by the hon. Member for Southampton, Test (Dr Whitehead): that in places like Northern Ireland this will simply push investment in electricity into the Irish Republic because of the single electricity market, rather than keep electricity production in Northern Ireland?

[Danny Alexander]

I recognise the force of the hon. Gentleman’s concerns, and I have great respect for the detailed way in which he puts them forward, which I have learned about through the relationship we have had as a result of his role as Finance Minister in the Northern Ireland Assembly Government. On this point however, I have to say that I think he is wrong. I hope that the carbon price floor will, alongside other measures, encourage investment in low-carbon power generation, including in Northern Ireland. That is what we are seeking to achieve through this mechanism. I think he also referred to energy-intensive industries, and we have announced that the climate change agreements, which are to the benefit of such industries, are to be rolled forward for another phase and that the relief given through those agreements is to be significantly increased. I hope that will ensure that such energy-intensive industries will be able to make the transition to lower, or different, energy use in a way that does not have the economic effects he describes.

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[Michael Connarty (Linlithgow and East Falkirk) (Lab)]

Despite what the hon. Member for Bristol West (Stephen Williams) has just claimed about the Bill’s great achievements, I am afraid that the Liberal Democrats will be remembered for only one thing—the fact that they all, including their leader, pledged not to raise tuition fees. That is never going to go away, and everything else that they say will be seen in the light of that betrayal of the future of our young people in this country.

I was pleased to hear the thoughtful contribution from my right hon. Friend the Member for Croydon North (Malcolm Wicks) on the proposals on pensions, and particularly on pension ages. If we look back at the history of the actuarial analysis that was used to set the pension age at 65, we see that it was set at that age because most working-class people—there were many more people in heavy industry then—died before they reached the age of 65 years and six months. The calculation was made to minimise the amount that would have to be paid to the working class for their pension contributions. The change that is now being introduced adheres to that same principle. It does not involve earned rights through contributions. Rather, as my right hon. Friend said, it is seen as an imposition if someone without an adequate income lives too long, and has to rely on the state for support.

I am going to disappoint my right hon. Friend now, because I am going to return to the subject of the oil and gas industry. The contribution by my hon. Friend the Member for Aberdeen North (Mr Doran) was important but, like that of the hon. Member for Dundee East (Stewart Hosie), it related to the upstream industry—the oil and gas exploration and production industry. I shall quote from the June report of the House of Commons Select Committee on Energy and Climate Change, which the Government do not seem to have read. It says:

“The oil and gas industry operating on the UK continental shelf currently faces a quadruple whammy of high costs, low prices, lack of affordable credit and a global recession. Unless the fiscal and regulatory regime is well designed and highly attractive then the likelihood is that the UK may not recover anything like as much of its reserve as would be desirable.”

The Committee did not realise that there was another spectre to add to the quadruple whammy—a predatory Chancellor who did not even consult the industry when he brought in a £2 billion rise in the tax burden. This is not so much about the level of the rise as the method of its introduction. Changing a tax regime overnight without consultation creates uncertainty, which increases risk. According to the economists with whom I trained when I was studying, when the net present value calculations are made when looking at board bids for investment, such activity can reduce the investment’s attraction. We heard that again and again from the Members who spoke about the upstream industry.

I have been pursuing the so-called responsible Department with questions about the downstream industry—the UK oil refining industry. I tabled an early-day motion on 29 March drawing attention to the fact that two oil refineries were up for sale. They have since been sold to overseas investors. I said at the time that 150,000 jobs were involved. Those jobs are now genuinely under threat.

We have looked at the opportunities as well as the warnings, however. One opportunity involves the fact that there are massive deficits in low-sulphur, high-quality diesel and in aeronautic fuel in the EU at the moment. With the right incentives, it would be attractive for someone to invest in those. The Budget proposals that the Government are putting forward in the Bill should therefore provide those incentives.

It is interesting to note that an opportunity was spotted by Mr Ifty Nasir, who owns Essar, an Indian oil company, which bought a refinery at Stanlow. He said on 11 April 2011 that he intends to expand Stanlow’s shipping terminal in the Mersey to provide a UK entry point for diesel and petrol produced at the Vadinar refinery in India—one of the biggest refineries in Asia, which is in the midst of a £1.7 billion expansion that will allow it produce euro high-quality, low-sulphur diesel. That is the very opportunity that should exist for our refineries, for our companies and for British workers.

I wrote about this to the Minister of State, Department of Energy and Climate Change, the hon. Member for Wealden (Charles Hendry). I asked what future support for our refineries in the UK would be forthcoming. In his reply of 5 April, he said:

“We work closely with the downstream oil industry and its representatives to understand the impact of policy on the sector and to ensure this understanding is shared across a range of Government Departments.”—[Official Report, 5 April 2011; Vol. 536, c. 886W.]

We had an hour and a half’s debate this morning in Westminster Hall about oil refining. I come here tonight to ask Ministers about the Treasury’s understanding of this issue and what its response has been, as I can find no indication that the Chancellor is joined up to the real world in any way in respect of his Budget proposals that will affect the UK refining industry.

Let us consider the background to oil refining. When the climate change levy and the EU emissions trading scheme were brought in, they were to have an impact on manufacturing, but were also to be tax-neutral. The scheme was about redistributing energy-reduction incentives in other parts of the economy, and it is about to become the European trading system mark 3. It puts £15 million a year on to the cost of refining oil in Grangemouth, a refinery in my constituency, alone. That is a high price to pay, but the industry accepted that environmental standards meant accepting it.

What we have effectively is a 15% disadvantage in EU refining, of which we are part, in comparison with the rest of the world, including India. If we bring in the new carbon tax, which the hon. Member for Bristol West seemed to be lauding, it will add another 10% disadvantage on top of that 15% one—and for UK refining alone. We will be disadvantaged in Europe by 10%, and in the rest of the world by 25%, in terms of the environmental taxes we pay. The cumulative cost to UK manufacturing business in general—we should remember that the Government said that they were going to “rebalance” the economy with their taxes and incentives—will be £9.3 billion. That price will not be faced by other parts of Europe or other parts of the world.

I want to know from Treasury Ministers what thought went into this policy. What extrapolation did they make? What cost-analysis or impact-analysis did they do when they thought up this scheme? The scheme does not attract me, when 1,350 jobs are at stake in the refinery in my constituency. Beyond that, another 4,000 or 5,000 jobs in Scotland are dependent on that downstream work. About 150,000 people working in the refinery industry can see someone coming over from India to import a product that is refined in India where the pollution standards are much lower than here, yet the Indian owner does not have to pay either the emissions trading scheme costs or the carbon floor price. I want an explanation of why that tax is in this Budget.

Let me illustrate what happened on the day of the Budget because of the announcement that a carbon price will be introduced in 2013. A forward pricing exercise run by Heren shows what happened to electricity prices on that day. The electricity price for 2013 went up by £2.20 per megawatt-hour because of the fear and risk that had to be factored in. We spoke of the same thing earlier in connection with the impact of the Government’s decision to plunder the profits of the offshore industry. The price has now risen by another £3 to £56.50. That 5% increase will affect all industries that are heavy electricity users. The oil refining industry cannot pass it on, because its margins are so small. The Government said that they would rebalance the position in favour of the manufacturing base of our economy, but instead they have laid that burden on it.

The second tax that I wish to discuss is the carbon reduction commitment, which was designed by the Labour Government as a tax on office spaces and other entities that could not be reached by the emissions trading scheme. It has since been simplified, and we understand that it will also apply to the manufacturing industry and to United Kingdom refining. The UK Petroleum Industry Association has described it as no more than another general tax. Will the Treasury exempt manufacturing industries and the UK refining industry from that tax? If not, it will impose another burden on the UK’s manufacturing capability.

[Sammy Wilson]

Not only has the tax been extended to a wider range of bodies, but the Treasury has removed an incentive for firms to reduce energy consumption. Some of the money that they had paid into the scheme used to be returned to them, but that will no longer be the case.

[Michael Connarty]

The hon. Gentleman has hit the nail on the head. That incentive has gone. Ports such as Grangemouth, in my constituency, cannot pass the tax on to those who rent or are sublet property. It will not make people who rent property more energy-conscious, although it was originally designed by the Labour Government—who employed an excellent methodology involving a great deal of consultation with the industry—as an incentive for the reduction of energy use.

The Department for Business, Innovation and Skills is probably partly responsible for matters involving the oil refining industry, although it seems to be burying its head in the sand and kicking that responsibility over to the Department of Energy and Climate Change. The two Departments are supposedly engaged in a study of the cumulative impact of climate change and energy policies. However, the Treasury must be involved as well, and it must take responsibility for the damage that it will do if it does not moderate its carbon taxes. Specifically, anyone who pays the costs of the European emissions trading scheme should be exempt from them. It has been calculated that the carbon price in the UK is likely to reach €54 per tonne, while the price on the European mainland will be only €36 per tonne. We are therefore at a disadvantage in relation to Europe, let alone the world.

There is a further tax that the Treasury consistently hang on to. Those who import a fuel oil must pay tax on what they land at the depot or terminal. If, for example, Grangemouth refinery supplies the terminal in the north of Scotland by tanker, it will pay tax on the amount of product that it puts into the tanker. However, an evaporation factor places an additional burden on every tanker load, so no one with any sense will convey fuel from a UK refinery to any UK destination. INEOS in Grangemouth prefers to import it from Lavera in France, because it pays less tax on the same tanker load, because of evaporation. Regardless of which party is in Government the Treasury has retained that tax, but it is time to reconsider. If we want products to be made in this country and taxed in this country, we must have a tax system that gives incentives to industry rather than punishing it.

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[Sammy Wilson (East Antrim) (DUP)]

As a Member who represents part of the United Kingdom that has seen the highest increase in unemployment and that will see £4 billion taken out of public spending over the next four years as well as a 40% reduction in capital spending, may I say that I trust that the Chief Secretary was right to say what he did about the purpose of this Finance Bill, the objectives the Government have set for it and their hopes for it? That might seem strange from someone on the Opposition Benches, but if we consider the impact of the recession and the absence of growth on my constituents and on the public across the United Kingdom, we can only hope to get back on to a growth trajectory as quickly as possible. I am not so sure, however, given the proposals in the Finance Bill and the Budget, that that will be the case.

As the shadow Chief Secretary said, there is a lack of ideas on the demand side. Indeed, over the next five years, the Bill will put only £20 million additional money into the pockets of businesses and consumers, which is hardly a big increase that will allow the public and businesses to spend money. We know that Government spending is curtailed. As for investment, I believe that it will not have the impact that the Government hope that it will. The Government are relying on one other aspect of aggregate demand—exports. As I shall point out, some policies in the Bill will make it much more difficult for firms to be competitive. On the supply side, firms will invest only if there is a degree of confidence, if there is consumer demand and if there is the infrastructure that can give them that confidence. With cuts in the capital budget, in particular, I am not sure that that will be the case.

I do not want to get into a macro-economic analysis of the Finance Bill, as I want to follow on from the theme taken up by the hon. Member for Linlithgow and East Falkirk (Michael Connarty) and to consider the impact of some of the environmental taxes. Specifically, I want to consider the distorting impact that they will have on growth, industry and consumers in places such as Northern Ireland.

Some Members will know that I am not a great fan of green taxes—indeed, for many reasons, I do not believe that the adjustments that such taxes will make and their impact on CO₂ output in the United Kingdom will save the world or have a great impact on the climate in 100 years’ time. They are not designed to be behaviour changing and, as the hon. Member for Linlithgow and East Falkirk has pointed out, some that have been claimed to be behaviour changing have resulted in nothing but stealth taxes. If we consider the Government’s predictions for the revenue from such taxes, it is clear that the Budget is dependent on their not changing behaviour. Otherwise, revenue predictions will be short of what the Government anticipate. The final reason why I do not support the taxes was shown in the illustrative example about the oil industry. Rather than helping to achieve the objective set out by the Government, namely to make our tax system the most competitive in the G20 and to encourage investment and exports, these taxes will make industry less competitive.

Let me deal with one tax to start—the carbon price floor. We have heard from the hon. Member for Linlithgow and East Falkirk about the impact on the oil refining industry. If one considers the Budget figures published by the Government, one can see that over the next five years firms will, as a result of the reduction in corporation tax, save approximately £1.1 billion in year five. As a result of the imposition of the carbon price floor, they will pay £1.4 billion. All the gains from the reduction in corporation tax will be wiped out and more by one specific environmental tax. Of course, that cost will fall more heavily on the very industry that the Government hope will lead the charge for growth, namely manufacturing, which is one of the biggest consumers of energy. As energy prices go up as a result of the carbon price floor, it will have an impact on business costs. We have heard the example of what will happen in the oil industry. The Government have published figures showing that for some heavy energy consumers, such as firms that make glass, tyres or metal products, the impact will be a rise of as much as 9% on their energy bills.

The carbon price floor will also have an impact on consumers. If the Government’s figures are anything to go by, electricity prices will have gone up by 6% by 2015. Let me put that into context: it means an increase of £30 a year on an average household electricity bill of £500. However, as a result of the Budget and the tax changes in it, households with income at the 10th decile—the lowest-income households—will receive an increase in household income of £1.42 a year. So, the impact of this tax, which the Chief Secretary has proudly said we are the first in Europe to impose, will be to increase fuel poverty among the lowest-income households and to make manufacturing industry less competitive at the very time when we want it to lead the charge for growth.

The tax has specific connotations for places such as Northern Ireland, because we are part of a single electricity market that links us to the Irish Republic, which has not gone down this route. The way in which the single electricity market runs means that electricity is drawn from the cheapest producer first and then, as demand increases during the day and at peak times, it is drawn from more expensive producers. The impact of the tax will be that the cheapest producers will be in the Irish Republic, which will have two impacts on people in Northern Ireland. First, our security of supply will become imperilled, because we will become more reliant on producers from the Irish Republic. Secondly, as the tax will be imposed on gas, which is used in Northern Ireland mainly for electricity generation, the cost of extending the gas network in Northern Ireland will fall on consumers as the consumption of gas goes down. The whole purpose of exempting Northern Ireland from such measures for a number of years was, first, to try to deal with fuel poverty by increasing gas distribution across Northern Ireland, thereby making businesses more competitive by ensuring there was a gas network, which enabled them to use cheaper fuel, but the carbon price floor is likely to put all that in jeopardy.

I welcome the discussions with the Treasury and the fact that it wants to investigate more fully the impact of the carbon price floor on places such as Northern Ireland. I hope that there will be a revision once the full extent of that impact is seen in terms of what it does to the electricity market, to the cost of energy for consumers and businesses and to the ability to increase the gas distribution network. Those who are concerned about carbon dioxide output and production will find it ironic that the tax could drive power production towards coal-fired power stations in the Irish Republic—so it will not even achieve, on a European basis, the objective that the Government have set out for it.

The second tax that I want to consider, which has been frozen for this year, is air passenger duty. The tax was designed to cut air travel and, in doing so, supposedly to reduce the amount of CO₂ produced by people who fly around the world. One of the problems in a region such as Northern Ireland is that the Government of the Irish Republic, who received a loan of £7.5 billion from the Government here in London, have used part of that to reduce their air passenger duty to €3 and intend to reduce it to zero. That has an impact on the one international flight from Northern Ireland. Members may say, “Big deal—one international flight,” yet a large part of our economic strategy involved attracting investment from north America. We have succeeded in getting Citibank, the New York stock exchange and a range of other big investors into Northern Ireland, bringing high quality, highly paid jobs on the basis that there was a direct transport link between Northern Ireland and north America, as north American business men wanted.

As a result of the distortion of the air passenger duty, we are likely to lose that Continental Airlines flight, our only link with north America, as the airlines find that it is much more competitive to fly from Dublin, 100 miles down the road. That is one of the ways in which an ill-thought-out tax can cause distortion. It is not as though there is not an answer to it. Recognising that air passenger duty caused problems for areas away from the centre, the Government have already introduced an exemption for the highlands and islands of Scotland. An exemption could be made as part of the rebalancing of the economy of Northern Ireland. I look forward to the discussions with the Treasury on the impact of the tax, which may or may not be beneficial. I leave Members to make up their own mind about it. It may reduce air travel, or simply make it more difficult and more expensive for our constituents, but the distorting effects must be taken into account.

The third topic is the aggregates levy credit scheme—

[Mr Nigel Dodds (Belfast North) (DUP)]

Before my hon. Friend moves on to that, does he agree that the carbon issue, as well as the issues of air passenger duty and corporation tax for Northern Ireland, arises because Northern Ireland has a land frontier with the Irish Republic, which is a unique circumstance within the United Kingdom? [Laughter.] That is not special pleading, but a recognition of the special circumstance in which Northern Ireland finds itself, because it shares a common land frontier. England, Scotland and Wales do not; we do, and therefore people find it easy to go down the road and fly out of Dublin, as opposed to Belfast. Government Members may laugh at these matters of fact and economics, but they are harsh realities for those of us who live in Northern Ireland, who try to make the economy work and who are trying to grow the private sector. All we are asking is that a Government committed to the private sector should help us in that, not diminish us or reduce our efforts to do so.

[Sammy Wilson]

One can see the mirth of Government Members. I can understand why the Liberal Democrats are keen to see regulation, interference and high taxation, but I would have thought that Members on the right wing of the Conservative party would sympathise with the case that I have been making, which is that less regulation helps to grow the economy and that less of the distorting impact of the influence of Government can help to improve the economy of Northern Ireland and enable people to stand on their own two feet.

[Jacob Rees-Mogg]

I thank the hon. Gentleman—if I may say so, my hon. Friend—for giving way. Many of us on the Government Benches sympathise with that point of view.

[Sammy Wilson]

I knew from the hon. Gentleman’s speech that he has sympathy with that view. Indeed, I hope that such sympathy will also be found among Treasury Ministers as we discuss these matters.

The problems with the aggregates levy credit scheme are also a result of the land boundary with the Irish Republic. The aggregates levy was designed to encourage the recycling of building materials and reduce the use of virgin stone from quarries. It is good not to waste building materials, and the levy made sense in an area that is surrounded by sea and does not have a land boundary with another country that also quarries stone but does not impose such a levy, so allowances were made for firms in Northern Ireland. The Government are sympathetic to the continuance of the scheme, but as a result of a referral to the EU Commission it has been stopped. I notice that provision has been made in the Bill for a new scheme, albeit an altered one, which can be made available once discussions have been held with Europe. Again, I look forward to that and hope that we will get a positive response from Treasury Ministers.

I very much doubt that there is a great deal of sympathy for my views on the green taxes, but I hope that there will be sympathy and support for the need to look at their distorting impact on a part of the United Kingdom that is up against competition from a country that does not impose the same level of taxation. The Government have said that they want a competitive tax system; we want that. They say that they want to create a situation in which exports and private industry can grow; we want that. I therefore think that cognisance must be given to the points that I have made.

Amendment of the Law

Sammy Wilson Excerpts

Wednesday 23rd March 2011 Commons Chamber

[Sammy Wilson (East Antrim) (DUP)]

I appreciate being called so early in the debate, Mr Deputy Speaker. In Northern Ireland we are in competition with neither the Conservative party nor the Liberal Democrats when it comes to elections, so I suppose I can afford to be a little more objective in my assessment of the Budget. As we know, the allies of the Conservative party in Northern Ireland have now abandoned them, and the hon. Member for Belfast East (Naomi Long), who had some association with the Lib Dems, has abandoned them since coming to the House, so I hope that I can be objective on this.

The Chancellor made it clear in his speech today that his ambition for the Budget is that it should promote growth in the economy, and I wish him well in that. Coming from a part of the United Kingdom where growth has been most sluggish and, as a result, unemployment is rising faster than in any other part of the UK, I know that success for the Chancellor will mean success for our economy. It will reduce the deficit so that huge resources will not go simply on paying interest, put people back into work, increase living standards and, in the long run, provide funding for vital public services.

I wish the Chancellor well in that, but I think it is a little ironic that the Budget has been headlined as a Budget for growth, because one of its major statistical announcements is that growth forecasts have been downgraded once again. Indeed, the Chancellor optimistically indicated last June, and again in October, that the measures he would undertake would give us growth of around 2.5% or 2.3%, but in the six months since then we have had a 33% reduction in his forecast. There is a certain degree of irony in that, which is one of the reasons I believe that some of the criticisms that have come from the Opposition about the speed and depth of deficit reduction have some merit. I remember that when I used to teach economics I would say that there are always two sides to the economic growth coin. First, there is the question of how to increase the economy’s potential to produce more. If we do not increase potential, once demand goes up, all we get is inflation, or we will suck in imports.

The Chancellor outlined a number of measures today—I will not go through them all—some of which are contradictory. The measure that he held out as the beacon at the start of his speech was the decrease in corporation tax, which he argued will give firms the ability to keep more profits and, therefore, the opportunity to invest in new equipment, new markets or research and development. According to the Red Book, the decrease in corporation tax should put £1.075 billion into the coffers of companies over the next five years, so it could certainly be argued that the Chancellor has released resources for companies to invest if they choose to do so.

However, on the next page we see that, as a result of wanting to be a trendy green, or I suspect of looking for a stealth tax, he is imposing a carbon floor price. By 2015, all the additional revenue that firms will have from the decrease in corporation tax will be more than absorbed in the carbon price floor tax—£1.41 billion. On the surface, the measure appears to be a way of releasing resources to companies, but closer examination shows that companies will not be much better equipped.

[Stephen Williams (Bristol West) (LD)]

Will the hon. Gentleman concede that the whole purpose of a carbon tax is to incentivise firms to change their behaviour so that those that do change their behaviour by producing goods more sustainably will pay less carbon tax and benefit from reduced corporation tax and those that do not will pay more?

[Sammy Wilson]

That is clearly not what the Chancellor intends, because he hopes to raise £1.4 billion. If the hon. Gentleman is saying that this is all about changing behaviour so that firms do not get the money, there is an immediate hole in the figures the Chancellor is presenting to the House today. I suspect that it is not all about that at all, but is another way of raising tax. What appears on the surface to be a good supply-side measure will be more than offset by some of the other measures undertaken. Of course, the kinds of firms that are most likely to be hit by this are the very firms that the Chancellor says he wishes to promote: those in manufacturing industry. The service industry will not be hit by those measures as much as manufacturing will, and, given Northern Ireland’s reliance on gas and oil to fuel and power manufacturing industry, and the fact that our energy costs are already higher than in other parts of the United Kingdom, that will gravely disadvantage manufacturing firms in Northern Ireland, at the very time when the Executive in Northern Ireland is trying to rebalance the economy.

[Sajid Javid (Bromsgrove) (Con)]

The hon. Gentleman started his speech by saying that he would provide a more objective analysis, and I was excited by that. In that vein, does he accept that the Chancellor’s announcement that, for the first time, as a major departure from corporation tax policy, he would consider a separate tax rate for Northern Ireland, making the whole Province an enterprise zone, is very welcome and could help with some of the things that the hon. Gentleman is pointing out?

[Sammy Wilson]

I wish to come to that point later, but I hope the hon. Gentleman will accept that my comments so far, at least, have been objective, because they are based on the figures that the Chancellor has provided.

The Chancellor talked about another measure today for encouraging growth, the enterprise zones that the hon. Gentleman mentions. When we look at the figures in the Red Book, however, we find that in the first year, 21 enterprise zones will eventually be in place but the money made available to businesses as a result of tax exemption will amount to £20 million. By the final year, the figure will be £80 million, and I do not know whether £4 million in each zone will generate a great deal in additional output.

[Mr Kevan Jones]

In 2009-10, the budget for the nine regional development agencies in the UK was £2.2 billion.

[Sammy Wilson]

That probably puts it all in perspective. The measure looks good in the Chancellor’s speech, but, when one looks at the resources that it releases, which in turn are supposed to increase the willingness of firms to invest and the productive potential of the economy, one sees just how miniscule it is, and we have to judge whether it will make a very great impact.

[Mr Nigel Dodds (Belfast North) (DUP)]

My hon. Friend speaks with great expertise as the Minister for Finance in Northern Ireland, and I congratulated him on the production of his budget there just a few weeks ago. Does he share my concern at the response from the Secretary of State for Northern Ireland, during Northern Ireland questions? When asked about the enterprise zone and the real substantive changes, he said that it was really a phrase he had been using to “cover”—that is the word he used—the idea of Northern Ireland being more open for business in relation to corporation tax. Does my hon. Friend share my concern that, in Northern Ireland, there might not be much substance to that phrase?

[Sammy Wilson]

My fear is that, not just in Northern Ireland but throughout the United Kingdom, the measure will be more like a branding exercise and good for a soundbite, rather than something that will have any real impact. I hope that the measure has an impact, but, if I look at the amount of resources that will go into the zones, and at what really is required to lift such areas, I fear that it will not.

Other changes have been mentioned, such as those to the tax structure, and I noted what the Chancellor said, but some of them might not include extensive consultation—the issue is complex—and might be years away. So, again, they look good in the Budget, but what is the immediate impact going to be?

[Helen Goodman (Bishop Auckland) (Lab)]

On that point, it is interesting to look at the changes to national insurance contributions, which are forecast to have an impact right out to 2016, because they show that the proposed bringing together of the two taxes—national insurance and income tax—will not happen for at least five years.

[Sammy Wilson]

I hope I am not quoting the Chancellor wrongly, but I think he talked about nine years in the future before those changes have an impact, so again we have to ask, “What is the impact going to be?”

[Dr William McCrea (South Antrim) (DUP)]

Does my hon. Friend agree that the Chancellor missed a vital opportunity for the Northern Ireland economy today? Does my hon. Friend think it right that a £7.5 billion loan from the British Exchequer to the Government of the Irish Republic should be used to enable that Government to abolish air passenger duty, which in turn gives them an unprecedented competitive edge on flights, bearing in mind that it impacts on my constituency and the international airport in it?

[Sammy Wilson]

I am a bit miffed, because I wanted to use that point later in my speech, so I will have to scribble it out. When we look at some of the issues, whether they are the delays, the amount of money being put in, the offsetting of increases in taxation when some tax cuts have been made, the regulations or the consultation that has still to take place with Europe to see whether we can reduce red tape, we have to ask whether the predictions for future growth based on the supply-side measures in the Budget are as fragile as the autumn predictions that were wiped out by a fall of snow. If that is how fragile the predictions are, then I have concerns.

There is another side to the coin, because not only do we have to increase the productive potential of the economy, but people must be willing to purchase the goods that can be produced, and aggregate demand can be made up of several different factors. The Government have already ruled out one for very good reasons, and I accept that the deficit has to be reduced. I may have some issues about how quickly it is being reduced, but the one thing we do know is that Government spending is not going to take up the slack that already exists in the economy.

Consumer spending is not going to take up the slack, either, because the Chancellor made it quite clear that he would not make any tax giveaways. Indeed, if one looks at what he said about the indexation of direct taxes, one finds that he has now built automatic increases into the tax system for the next four years. There will not be discretion on a year-to-year basis; inflationary increases are now built into the tax system.

That leaves investment demand and exports, and it seems that the Chancellor is emphasising the role of exports. Given that over the past year and a half the exchange rate has fallen by 20%, our export growth is still one of the weakest among the OECD countries. Investment might improve competitiveness, but the only direct measure that the Chancellor has produced today is the export credit guarantee. I have quickly looked through the Red Book to see how much the guarantee involves, and I cannot get a figure, but that is the only measure to increase the one component of aggregate demand on which the Chancellor is relying to improve growth in the economy.

If we look at the supply-side measures and the lack of demand-side measures, we have to ask, “Can we really be confident that this is a Budget for growth?” The conclusion that I come to—not because I want to take a pot-shot at the Government, but because I want to get in behind the figures to see whether the hope being held out is genuine—is that I am left with some concerns.

[Mr Graham Stuart]

The hon. Gentleman is right to be sombre because of the situation the country is in. The Chancellor mentioned what is happening in other countries, and we are in a fragile position because of the appalling inheritance. The growth predictions, however, are no longer the predictions of a politician; they are the predictions of the OBR. We are in a very fragile state, and it is no wonder that predictions change, but the prediction is that over this Parliament this country’s growth will be higher than the EU average. That, considering where we started, would not mean golden times, but it would be a solid achievement.

[Sammy Wilson]

Of course, the earlier growth figures were also OBR-ified, if one wants to use that term, yet they did not prove to be realisable over a six-month period. We cannot simply rely on the assurances that the OBR has looked at the figures and thinks they are okay, as there could well be a revision. I am merely pointing to some aspects within the Budget document that give me cause for concern as to whether these growth figures can be achieved. If they cannot, there are implications for the deficit, for employment, for living standards, and for the ability to provide public services in future.

Let me turn to some of the measures that apply to Northern Ireland. As we heard in an earlier intervention, tomorrow morning an announcement will be made about the corporation tax proposals for Northern Ireland. I am waiting to see that. I have no doubt that the ability of the Northern Ireland Administration to reduce corporation tax could be a useful lever. As a Unionist—I know that the hon. Member for Dundee East (Stewart Hosie) will probably be totally appalled that anyone from a devolved Administration should say this—I do not want to see huge fiscal powers devolved to Northern Ireland. I am part of the United Kingdom, I want to remain part of the United Kingdom, and I wish fiscal powers to stay part of the United Kingdom.

There has been a groundswell of opinion for some variation in corporation tax; indeed, the Secretary of State for Northern Ireland has been very enthusiastic about it. However, there is no point in devolving corporation tax if the price tag attached is such that it savages public expenditure, which has already suffered a huge cut as a result of the Budget decisions made last October. There would be a gestation period between a reduction in corporation tax and the impact on jobs on the ground, whereas any cut in public spending or in the block grant would take immediate effect. There would be no increase in private sector employment, together with an immediate decrease in public sector employment, and that cannot be good for economic recovery.

I fear that the figures in the document that we have tomorrow will be neither a fair reflection of the cost of devolving corporation tax to Northern Ireland nor the kind of opportunity and offer that would be attractive to the Northern Ireland Administration. We will want to see that the Treasury and the Government have not made a savage reduction in the block grant even though it bears no relation to what the real cost of devolving corporation tax might be.

[Mr Dodds]

Does my hon. Friend agree that there is a supreme irony in the fact that as part of the conditions for the bail-out of the Irish Republic—£6 billion of UK taxpayers’ money—the Irish Republic insisted that its corporation tax rate would stay at 12.5%, yet Northern Ireland, which, uniquely within the United Kingdom, is in direct competition with the Irish Republic, would be allowed to reduce its corporation tax but would not receive any similar subsidy from the UK Treasury, whereas the subsidy is going directly to the Irish Republic?

[Sammy Wilson]

We can see how the bail-out of the Irish Republic conflicts with what is happening in Northern Ireland. My hon. Friend the Member for South Antrim (Dr McCrea) mentioned air passenger duty. I am disappointed about this because the Chancellor could have done something about it. In particular, the one flight between Northern Ireland and North America is very important in attracting not only tourists but inward investment. A sum of £2.1 million would have ensured that that flight continues, yet the Chancellor did not find that he could allow for regional variation. There are precedents for that because regional variations are allowed for Scotland. The irony is that the Irish Government, using the £7.5 billion that was obtained from the United Kingdom, are now going to abolish air passenger duty, which places them at an even more positive advantage regarding the service that flies from Northern Ireland.

[Mark Durkan (Foyle) (SDLP)]

Will the hon. Gentleman acknowledge that the Irish Government had made the decision about air passenger duty before any loan facility was agreed with the UK Government—and I stress that it is a loan facility?

[Sammy Wilson]

I find it strange that the hon. Gentleman should want to apologise for the Irish Republic, which is in direct competition with the economy of the area that he represents, but we will leave it to his constituents to question him about that.

The Chancellor has made much of the fuel duty escalator. Northern Ireland does not have the highest fuel prices in the United Kingdom, but it certainly has the second highest, and we also have the problem of the border with the Irish Republic. I would have hoped that the Chancellor would come through on the promise that he made when he was in opposition. We have a promise that future price increases will be deferred, but the impact on current prices will be very slight. That leaves Northern Ireland, with its high dependence on road transport for its manufactured goods and its dispersed rural nature, at a disadvantage.

I acknowledge that the Government have responded to some developments recently. I look forward to seeing the outcome of the aggregates levy and the allowance that has been made. I welcome the fact that the loan facility for the Presbyterian Mutual Society has been built into the Budget. In his concluding remarks, the Chancellor said that he would put the fuel in the tank of the British economy so that it could drive forward. I may be about to show my age, but I hope that it is a tiger in the tank so that we finish up with a tiger economy. I fear that we are going to run out of fuel very quickly, and we will all be poorer for it.

--- Later in debate ---

[Mr Jones]

Yes. That is the entire flaw in the Government’s policy: the idea that they can cut public expenditure as deeply and savagely as they are going to, and that somehow jobs will be created in the private sector—something that will just not happen. It might happen in parts of the economy, but there is certainly no indication that it will happen in my region. In fact, the situation is even worse, because Durham university’s model shows that taking out 20% of the public services will lead to 50,000 jobs going in the north-east, with 20,000 of them actually in the private sector. Replacing those jobs, in addition to the 30,000 in the public sector, is going to be very difficult.

[Sammy Wilson]

Does the hon. Gentleman accept that, if the growth figures are wrong, the impact will be magnified and multiplied the further one moves away from the south-east of England? The impact on regions of the United Kingdom will be much more severe if the Chancellor has got it wrong.

[Mr Jones]

The hon. Gentleman makes a very good point, but do the Conservatives care? No, I do not think they do. We saw that in the 1980s and early 1990s in the north-east of England. His constituents will face similar problems to constituents in the north-east, given the contraction of public sector jobs, which will have a direct impact on the private sector. Trying to attract business and growth to those areas will be very difficult, and I fear that we could have a two-speed Britain: a reasonably prosperous south-east of England, but stagnant or even declining regions, such as the north-east and Northern Ireland. Does the Conservative party care about that? No, I do not think it does.

Fuel Prices and the Cost of Living

Sammy Wilson Excerpts

Wednesday 16th March 2011 Commons Chamber

[Justine Greening]

The hon. Gentleman is talking about postponements, because those fuel duty increases eventually came through. That is one reason why in their final months in office—from December 2008 to April 2010—the previous Government increased fuel duty no fewer than four times.

Over the weekend, the shadow Chancellor confidently proposed cutting VAT on fuel.

[Sammy Wilson (East Antrim) (DUP)]

The Minister quite rightly highlights in her amendment the previous Government’s fuel duty increases, but the motion recognises that people are feeling pain now, and holds out the hope that the Government will do something about fuel duty. Rather than talk about what the previous Government did, will she tell us what she intends to do to alleviate the hardship for people in places such as Northern Ireland?

[Justine Greening]

I shall not pre-empt next week’s Budget, but the hon. Gentleman knows that both parties in the coalition Government spoke in opposition about the effect of fuel duty on motorists. Conservatives spoke in opposition about how the oil price fed through into fuel prices at the pump, and Liberal Democrats talked about the impact of fuel prices on people living in remote rural areas. The coalition Government are now looking at how to tackle both those problems, but I cannot pre-empt the Budget.

Fuel Prices and the Cost of Living

Sammy Wilson Excerpts

Wednesday 16th March 2011 Commons Chamber

[Sammy Wilson (East Antrim) (DUP)]

I welcome the opportunity to bring a Northern Ireland perspective to the debate, although I expect that it will not be all that different from what we have heard from all round Great Britain. There are a number of particular problems which the escalation of fuel prices brings to a place that is on the periphery of Europe and on the edge of the United Kingdom, with all the attendant costs for industry, whether for the transport of raw materials in or for the transport of goods out.

At a time when the Northern Ireland Executive are trying to rebalance the economy and promote the private sector, such increases in costs present particular difficulties. They also present a difficulty when the fuel duty in Northern Ireland is much higher than in other parts of the island. For example, on diesel there is a 60% tax take, whereas across the border in the Republic it is 55%. That distorts competition in industry. Northern Ireland also has a large and dispersed rural community with high levels of rural poverty, so escalating costs will hit people who can ill afford them, as many Members have highlighted for their constituencies.

[Mr Jeffrey M. Donaldson (Lagan Valley) (DUP)]

Does my hon. Friend agree that an added problem in Northern Ireland is that it is the only part of the UK that has a land border with another state and that fuel smuggling has been endemic for many years? Would the Government not be better served by putting more resources into HMRC’s capacity to tackle fuel smuggling and apprehend those engaged in that unlawful activity, as that could bring in a lot more revenue to the Exchequer?

[Sammy Wilson]

I accept my right hon. Friend’s point: with a 20% price differential, fuel smuggling of course becomes a lucrative trade.

Although there are differences in approach, there seems to be a fair degree of unanimity that this issue needs to be dealt with. In fact, the only dissenting voice I have heard is that of the member of the Green party who sits in front of me, the hon. Member for Brighton, Pavilion (Caroline Lucas), who seems to think that it is a good idea that fuel prices go up. I think she is more interested in influencing temperatures in the world in 100 years’ time than dealing with the poverty people face in the present day—it is a quirky party, so of course it has quirky ideas.

A number of criticisms have been made of the motion before us, and I must say that I have some sympathy with them. I know that getting a derogation from Europe will not be easy. Indeed, after this debate I will be speaking with the Minister about the aggregates levy and derogations for it, and even for something that simple we are looking at more than a year for Europe to agree a variation on something that it has already accepted. One must bear it in mind that that is not a quick remedy. However, the motion at least highlights the issue, which is one reason I support it, and it does so in stark terms, setting out the impact that fuel price rises have on people.

The Economic Secretary’s response has been threefold. First, she spent quite a lot of her speech looking back. I suppose it is difficult for someone from Northern Ireland to criticise another for looking back, so you will have to allow me to overcome that irony, Madam Deputy Speaker. I admire the way the Economic Secretary made her argument. In fact, I like her style—head-butt the opponent, get them on the ground and kick them when they’re down. She should be an honorary Ulsterwoman. I appreciate her approach, but although the previous Government have a case to answer, I think that people outside are interested not so much in who did what in the past, but in what will happen in future. Although it was good to hear her robust response, it has to go further.

Secondly, the Economic Secretary gave a number of reasons why things could not be done. She talked about deficit reduction and the fact that there would be a cost attached to any action on fuel prices, but one point that has escaped mention in the debate is that we are talking about a windfall for the Government. The increase in money that has resulted from the price rises was not anticipated in the deficit reduction plan in the first place—at least I do not think that the Government anticipated there would be a war in Libya and that that would put up fuel prices and built that into their Budget. If they did, God help us, because if that kind of planning goes into a long-term Budget we should be very worried. It is a windfall tax, so the Government have an opportunity to give it back to the people; it does not impact on the deficit reduction plan and it alleviates a problem that they have identified.

Thirdly, the Economic Secretary said that she cannot pre-empt the Budget, and I suppose we must have some sympathy with that. I do not think that anyone would want her to do so, but if there is to be some good news in the Budget, I would have liked her to have at least softened us all up by giving some hope that that will happen.

[Robert Flello (Stoke-on-Trent South) (Lab)]

I am thoroughly enjoying the hon. Gentleman’s speech, but, to pick up on that point, Government Front Benchers could pre-empt the Budget by announcing now, as Labour did in the past, that the proposed increase will not happen. They do not have to wait until the Budget.

[Sammy Wilson]

I was just coming to that point. Government Front Benchers could today at least have offered us some softening up, some promise or some hope held out, but that was not apparent in the speech we heard. Perhaps in the winding-up speech there will be such an opportunity. The one thing we do know is that in opposition and faced with increasing fuel prices and protests about them, the current Chancellor said that when prices and the tax take go up, taxes should go down, and that when prices go down, taxes should go up. That was the policy enunciated when Government Members were in opposition. I look forward to next Wednesday to see whether that promise and policy will be given some effect in the Budget. If that happens, this motion and this debate will have been worth while and there will be at least some alleviation of the hardship that fuel price increases have brought.

Comprehensive Spending Review

Sammy Wilson Excerpts

Wednesday 20th October 2010 Commons Chamber

[Mr Osborne]

It did make a difference, and I found in the Treasury absolutely no plans to reduce the budget deficit. They were pencilled into the March Budget, which Labour Members all cheered at the time, but absolutely no plans were put in place.

I am delighted that we have been able to help Herefordshire in this way. It is one of the most rural parts of England, and I think that super-fast broadband is key to the future of the rural economy.

[Sammy Wilson (East Antrim) (DUP)]

We understand the economic mess that the coalition Government have inherited and the problems that it presents, but the spending review represents a huge gamble with people’s jobs, with economic growth and with public welfare. I suppose we all hope that it pays off.

How does the fact that capital expenditure will fall by 40% over the next four years in an already fragile Northern Ireland economy sit with the promise from the Secretary of State for Northern Ireland only last week that the investment programme would be protected? What assessment has the Chancellor made of the impact on his desire, and that of the Northern Ireland Executive, to rebalance the Northern Ireland economy?

[Mr Osborne]

Let me say first that the biggest gamble that the country could have taken in the current world environment would have been not to set out a credible plan to reduce the budget deficit. If we had not set out that plan and made our decisions, we really would have been in the firing line. Secondly, the capital spending cuts that I have—unfortunately—announced today are less than those proposed in the Labour Government’s plan, because of the increase in the capital envelope that I announced. That does make them particularly easy, but I have sought to prioritise infrastructure investments, and if there are good projects in Northern Ireland we can work on them with the devolved Administration. This is, of course, an area of devolved responsibility.

Finally, let me say that one of the absolute priorities of my right hon. Friend the Secretary of State for Northern Ireland, after security, is enabling the economy to grow and a private sector recovery to take place in Northern Ireland. I am sure it will be possible to arrange, some time later this year, an opportunity for us all to get together—the representatives in Northern Ireland, the Secretary of State and I—to discuss what we can do to help Northern Ireland see that private sector job growth.