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Clause 5
12.40 pm
Mr. Andrew Tyrie (Chichester) (Con): I beg to move amendment No. 16, in page 4, line 24, at beginning insert
'Subject to the provisions of subsection (7).'.
Mr. Speaker: With this it will be convenient to discuss amendment No. 17, in page 4, line 24, at end insert—
'(7) On any occasion when the average closing spot price of Brent crude oil has been at or above 37.84 US dollars per barrel for a period of fourteen days, the Chancellor of the Exchequer shall make regulations suspending the operation of subsections (1)(a) and (1)(c) of this section.
(8) In this section—
"Brent crude oil" means oil from the Brent oilfield in the North Sea; and
"average closing spot price" means the mean of the closing spot prices for Brent crude oil quoted on the International Petroleum Exchange on each day on which that exchange is open for trading within the period of fourteen days.'.
Mr. Tyrie: The purpose of the amendment is to make sure that the Government implement their stated policy. The Prime Minister, the Chancellor and the Economic Secretary, who is with us today, have all promised that if oil prices remain high, they will remove in August their planned increase of tuppence—the increase they intend to put through, and have announced in the Budget they will put through, in September.
Unfortunately, instead of giving a clear statement in the House, or even an unambiguous press release, this review has been announced through some unattributable press briefings, whose status it is difficult to know. It is not difficult to work out what headlines the Government wanted, which is what they got. I have some here: for example, "Brown confirms plan to scrap rise in fuel duty", and, in The Daily Telegraph, "Brown plans to abandon fuel duty increase".
Our amendment would force the Government to deliver on the promises that they have made to the public. It will work in this way: if the average closing spot price of Brent crude, the leading benchmark, rises back to the price at the time that the Government did their press briefings, the duty hike will be suspended. On 3 June, the day of those briefings, the closing spot price was $37¾, as indicated in the amendment. Under the amendment, the oil price will have to remain high for a period of two weeks before it triggers the suspension of the duty rise; a blip for a day or two will not be sufficient. Incidentally, today's price is less than $1 away from the price at the time of that announcement; we are back in the danger zone for oil prices and duty hikes again.
7 Jul 2004 : Column 845
The Economic Secretary may have some technical objection to my amendment. I have no doubt that he will have been heavily briefed on such things, but I should be grateful if he would address the principle. If oil prices return to the levels at which they stood when the Chancellor authorised those friendly noises for road users, will the Government suspend the duty hike? If the Economic Secretary cannot say yes, all those press briefings and reassurances that road users have heard will begin to look a bit hollow. People will be forgiven for thinking that they are just another ploy to acquire a few weeks' respite while prices were high.
We know the level of fuel prices that is needed to trigger friendly noises from the Government. What we really want to know is what increases are needed to trigger action. At the time of the Budget, the Brent crude spot price was over $34 a barrel. At the time of the press briefings, it was just over $37½. That tells us that when the Government set the rates, at the time of the Budget, they already knew that the price was at the very edge of what was tolerable. They knew that a mere 10 per cent. rise would be too much—hence their press briefings.
From the Government's response to the amendment, we will find out whether they really meant what they briefed or whether it was another case of media spin. We have had quite a bit of that. The Prime Minister has done the rounds, saying on several occasions that he sympathises with road users. Road users do not need sympathy from the Prime Minister. We would rather have firm commitments, which is what we would get from our amendment. If the Government will not accept it, the public will see that they are saying no to their own promises.
It is worth reflecting for a moment on how we got where we are. How did the Government get themselves into a position where a mere 10 per cent. rise in the oil price after a Budget can lead them to start briefing the press that they will reverse their policy of an increase in September? The short answer is that they are scared stiff of a repetition of the fuel protests that we saw during the last Parliament. The reason there might be protests is that petrol and diesel prices are already higher in Britain than in almost any other country. We have those levels because the Government took the price there. Under the Labour Government over the past seven years petrol prices at the pumps have risen from about 60p to 80p. Two thirds of that increase has been tax going to the Government.
The longer answer is that, in taking any decision, the Government are susceptible to opinion polls. I have no doubt that they have been doing their own private polling, which was subsequently supported by an ICM poll shortly after the Chancellor's press briefings. The Sunday Telegraph reported:
"An ICM poll for The Telegraph reveals a high level of support for demonstrations similar to those that brought chaos to Britain four years ago. It also shows widespread public anger at plans by Gordon Brown, the Chancellor"
to add 2p to the duty on a litre of petrol in September.
It is clear that the Government were getting signals like that from their focus groups and private polling. That is the reason for their announcement in June.
7 Jul 2004 : Column 846
Mr. Alex Salmond (Banff and Buchan) (SNP): As I recall, there was some confusion a few weeks ago about whether the Leader of the Opposition supported such protests. Can the hon. Gentleman clarify the position of the Leader of the Opposition, as he was not able to do so?
12.45 pm
Mr. Tyrie: It is for the Government to decide what they intend to do about fuel duty, rather than for the Opposition to decide what they intend to do about fuel protests. I take the hon. Gentleman's point. By implication, he is just as concerned and upset as I am about the scale of the fuel price hikes.
The Economic Secretary and the Government have embarked on a substantial campaign to convince us that the price hikes are something to do with world oil prices, not anything to do with the rise in fuel duty. He said in Westminster Hall that high petrol and diesel prices are
"a problem of world fuel prices, not UK fuel duty."
That is clearly not true. The key cost to the motorist is the taxman, not OPEC. As the AA pointed out,
"What Gordon Brown does is more important than what the world price does."
What the Economic Secretary should have said is that high petrol prices at the pumps are a problem of UK fuel duty, not world fuel prices. That would have been a much more accurate statement.
The Economic Secretary may say he needs the money. That is what he should say about the hikes. He came close to it in Westminster Hall when he said, rather revealingly:
"It is important . . . that we have the strength to get the balance right between a fair deal for the motorist and the haulier"
"the stability of public finances."—[Official Report, Westminster Hall, 8 June 2004; Vol. 422, c. 29–30WH.]
The public finances are no longer stable. The Chancellor is faced with a rise in borrowing, even though the economy is doing well. Tax revenues are short, which they should not be in an upswing. Raising money from motorists and road hauliers is one way of filling that hole, which is a hole of the Chancellor's making. He cannot easily afford to make concessions on petrol prices, but in what may become an election year, he cannot afford another fuel protest either. I fear that that is why we have had all those press briefings.
All the same, the Minister can reassure us, as I hope he will. He can accept the amendment or table one of his own that will have a similar intended effect. He can back the promises of his own boss with a statutory requirement, and he can give the motorist and the road hauliers a little more certainty in the months ahead, at least for the second half of this year. I very much hope that he feels able to do so.
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