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Justine Greening (Putney) (Con): I guess that, first of all, I should pay tribute to my new hon. Friend, the Member for Henley (John Howell), for delivering such a fantastic maiden speech. I was a big fan of his predecessor, but I can see that I am going to be as big a fan of my hon. Friend. My only criticism of his maiden speech was that he definitely undersold the skills that he is bringing to the House in terms of his previous experience in business. Speaking as someone who also came into the House after working in industry and business, I am sure that he will be able to put those skills to good use on behalf of his constituents and his party, and I look forward to that happening.
Todays debate gave the House an opportunity for what I hoped would be a constructive discussion on what the Government could do about the rising price of
fuel. The Conservatives have proposed a fair fuel stabiliser, and businesses, green groups and the public will all have a chance to give us their thoughts during our consultation on this proposal over the coming months. However, we thought that it would be sensible to give Parliament the opportunity to consider our proposals as well. Unfortunately, the Governments attitude during this debate has been one not of positive engagement, but of relentless defeatism and, in my opinion, criticism for criticisms sake.
As my hon. Friend the Member for Basingstoke (Mrs. Miller) and my right hon. Friend the Member for Wokingham (Mr. Redwood) mentioned, the issues that we are discussing today are real ones. The cost of livingparticularly the cost of transportis one of the most serious issues facing families and many businesses in Britain right now. My hon. Friend the Member for Basingstoke and my right hon. Friend the Member for Wokingham, as well as my hon. Friend the Member for Henley, said that these are particularly pressing issues for families, and especially for businesses, which cannot necessarily change their business procedures to avoid the kind of fuel price rises that we have seen in recent months. In the past year, we have seen a rapid rise in the price of petrol at the pumps. In September last year, a litre of petrol cost 95p; now, it is more than £1.19. Petrol price inflation in the UK is almost the highest in Europe, running at 17 per cent. In fact, it is second only to that of Estonia.
These soaring costs are having a very real effect on families and businesses. The current rate of price inflation would have meant an increase of £185 a year in household fuel bills by the end of this year, which would put the average familys expenditure on fuel at more than £1,000 a year. As the hon. Member for Dundee, East (Stewart Hosie) pointed out, this is a real problem for businesses and families. It is a serious burden for both those groups, and the Government would have been wise to take it seriously, but they have not done so. It is a burden that the Government could do something about, but they will not. Other hon. Members have looked for ways to tackle these issues. We have heard the ideas of the hon. Members for South Thanet (Dr. Ladyman) and for Dundee, East. However, when tasked with helping people at a time of real and urgent need, the Government have offered nothing more than excuses and token gestures, when they really needed to take responsibility and offer real solutions.
Somehow the public are meant to be grateful for todays announcement of a delay in the 2p rise. The Government are sending them a message, saying, Dont worry, weve decided not to make things worse for you. Were just going to keep things as bad as they already are, and you should be grateful for that. Frankly, that is typical of the Governments attitude so far. They are showing a shocking unwillingness to tackle the issue, saying, Dont blame us. What can we do? The line coming from the Governmentwe heard it again todayis that rising fuel prices are to do with the global price of oil and are therefore beyond the Governments control. When they finally take decisions on fuel duty, instead of introducing substantive policies to tackle the issue in the longer term, they give us policy by press release and policy by parliamentary question and answer. We all know we simply cannot go on running the public finances in that way. Everyone knows the bottom line: this is
about Glasgow, East and the Governments and the Prime Ministers political survival. It is not about proposing a long-term fundamental approach to addressing oil price rises and their impact on the cost of fuel. Ministers need to start tackling those issues.
What people want from the Government today is a helping hand to get them out of their financial troubles. Instead, what they see from the Government is no help at all. Far from providing a hand to pull them out of their troubles, the Government are pushing them further down into them. We heard nothing of value from the Chief Secretary today. The hon. Member for Edinburgh, South (Nigel Griffiths) did not have much to say by way of alternatives and was quite happy to back up all the platitudes that we heard from the Chief Secretary. Ministers need to stop being buffeted by events and actually get a grip on the situation.
Our proposals are all about trying to find a way through these challenges for hard-pressed families and hard-pressed businesses. We believe that they will help families by stabilising their finances and we believe that they will help the public finances by helping to insulate them from oil price rises. We also think that they will have a welcome dampening effect on inflation. That has to be better than the sort of nudge and wink policy that we have had from Ministers today, as there is a sense that the Governments approach is unsustainable.
Mr. Alan Reid: Will the hon. Lady explain how long the gaps will be between now and the adjustments taking place? If they are too longsix months was mentionedthe Chancellor will effectively decide, and if they are too short, the proposals will have what has been described as a yo-yo effect.
Justine Greening: The hon. Gentleman raises a fair point. The reason for going through a consultation process is to ensure that, unlike with the Governments new policies on capital gains tax, non-doms and the 10p tax rate, we get things right first time. We have learned from the Governments mistakes, even if they have not.
how frequently changes in fuel duty should be applied... and how they should be calculated
Both oil prices and retail fuel prices are already monitored on a daily basis, so data collection is unlikely to pose significant challenges.
Actually, it sounds like a response from a Treasury Minister who has no realistic alternative of her own. The reality is that the current situation requires action, not inaction, and it requires leadership rather than dithering. We have proposed this fair fuel stabiliser as a solution and we want to get it right first time. I would have hoped and expected that Government Ministers approached potential solutions to the impact of fuel prices on families with an open mind. Instead, when new ideas have been suggested, as today, they have simply been dismissed out of hand. In fact, Ministers have criticised other peoples suggestions while offering no ideas of their own. They are struggling along on a
day-by-day, by-election-after-by-election basis, desperately trying to provide the illusion of control. Frankly, it would be much better for families if they simply recognised a good idea when they have one put in front of them. They have done that on inheritance tax, capital gains tax and the 10p tax rate, so why not on road tax as well? Instead, they are putting their own political priorities ahead of what is right for the country.
I realise that no Government like to appear out of touch or out of their depth, but I have to tell Ministers that the public know that that is exactly what is happening. We have already reached that point with the current ministerial team running the country. The public can see that the Treasury is failing to cope with the challenges they have to face every single day. They need Ministers to rise above political posturing and tackle the problem. Businesses are going under; families are facing sky-rocketing fuel bills; and oil price fluctuations are destabilising the wider economy. We offer a solution that would be good for the Government, good for the economy and, most important of all, good for the people of this country who are struggling to cope.
I shall finish my contribution to this debate on fuel costs with a motoring analogy. We find ourselves with a Government and Ministers with so little direction that we feel inclined to give them a political sat-nav, but the problem is that they would not be able to put any political destination into it: half the Labour party would be shouting, Left, left! while the other half would be shouting, Right, right!, with no clue where to go next.
Yet again today, we saw Labour MPsself-proclaimed representatives of low-income familiesjustifying the Governments plan to keep high taxes on those very same families and crowing about their Government not going ahead with tax rises, as if that were some sort of achievement or success. On three Wednesdays running, I have watched them vote against relieving the financial burden on those families. Those constituents and families will ask themselves why MPs have taken no action on road tax, no action on the cost of living and no action today on fuel duty.
People will realise the answer to those problems: it is to get themselves a fresh Government with some fresh ideas who are willing to take a fresh approach to tackling the problems that our constituents face today and that need sorting out sooner rather than later.
The Exchequer Secretary to the Treasury (Angela Eagle): This has been an interesting debate and I am grateful to all hon. Members who contributed to it. In particular, I want to pick out the maiden speech of the hon. Member for Henley (John Howell), which we all enjoyed. It was a privilege to witness his arrival in the House. He has some interesting acts to follow and he alluded to that. He also mentioned his immediate predecessor, but among his predecessors in Henley there is quite a tradition of exciting, interesting haircuts at least. We on the Labour Benches will be interested to see whether anything interesting happens to the hon. Gentlemans haircut as a result of filling certain shoes. I congratulate him on making his maiden speech, and wish him a happy and enjoyable time as a Member of Parliament.
The hon. Member for Twickenham (Dr. Cable) made an interesting point when he asked why oil revenues should be pooled separately from other UK revenues. Why, uniquely, should oil revenues be pooled? The Conservative party needs to think about that. There is also the proposed green taxes pool, which would go into the family fund. One wonders where the Conservatives would collect their taxes to pay for general public expenditure. If they carry on like this, by the time we get to the next election they will have hypothecated the lot.
We listened to the advocacy of some of those who have been talking about stabilisers, regulators, moderators and various other words from the thesaurus in relation to fuel balancing plans. My hon. Friend the Member for South Thanet (Dr. Ladyman), who also suggested that approach, at least said that there needs to be a package of measures for fairer treatment for motoristswe would agree with thatbut that we need to consider the totality of revenues, rather than particular pieces of revenue in isolation. We should all bear that in mind.
My hon. Friend the Member for Edinburgh, South (Nigel Griffiths) spent some time quite accurately pointing out the many different faces of Conservative environmental policy, depending on where one looks and which audiences the Conservatives happen to be addressing at the time. Again, that is something we should be well aware of.
The hon. Member for Dundee, East (Stewart Hosie), who is something of a pioneer in this respect, must be sat back enjoying the interest that his proposals are attracting and the ripples that they are causing across all the Opposition Benches. I congratulate him on that.
The background to the debate is the rapid rises in petrol prices over recent weeks and months. Those rises have been caused by global forces, which have led to rising world oil prices. They are putting real pressure on many businesses and on many families finances. The Government have recognised that, which is why my right hon. Friend the Chancellor deferred the planned 2p per litre fuel duty increase in Aprils Budget. It is why he decided to postpone the rise planned for October this year, too.
By contrast, as my right hon. Friend the Chief Secretary demonstrated in her opening remarks, the Opposition have suggested a policy that would be a fuel duty destabiliser. It would achieve the very opposite of the things that they claim for it. Fuel duty is not the cause of the rapid petrol price rises of the past few months. Duty rates have not changed since October last year, yet fuel prices have risen 20 per cent., driven up by the near-doubling of the world oil price in the last year to record highs of more than $145 a barrel.
It is worth reminding the House of our record as a Government. Since 1999, we have abolished the Tory fuel duty escalator. Fuel duty rates have gone up only three times, and are now 17 per cent. lower, taking account of inflation, than in 1999. Instead of the current level of 50.35p, if fuel duty had gone up in line with inflation it would now be 61p a litre. If the previous Conservative Governments policy of a fuel duty escalator had been continued, the tax on fuel would now be 79p a litre, which is nearly 30p a litre more than the current level. Therefore, we need take no lessons from the
Conservative party about helping ordinary working people and businesses to cope with challenging economic circumstances.
It was the last Conservative Prime Minister, when he was Chancellor, who said that if it is not hurting, it is not working. But we know that it is the legitimate role of Government to help people through turbulent economic times, and not just abandon them to market forces. It was the Leader of the Opposition, not any member of this Government, who recently made a speech blaming the poor and obese for their predicament, and denying that the state should have a legitimate role in helping them to overcome their problems. We, however, will continue to help people through challenging economic times.
That brings me on to the policy proposals outlined recently by the Conservative party for a fuel duty destabiliser. My right hon. Friend the Chief Secretary has dealt in some detail with that suggestion. She rightly pointed out that the Tory fuel duty destabiliser relies on redistributing a fantasy tax windfallit simply does not exist, and cannot be redistributed to motorists or anyone else. The Tories fuel duty destabiliser assumes an ability to forecast and define a fair oil pricethe phrase that they usewhen the reality is that any such figure would be completely arbitrary. The Tories fuel duty destabiliser would cost £2 billion to £3 billion a year if duty rates were cut by 5p a litre as they suggest. There is no indication of where the money would come from.
Retailers would be likely to stop smoothing the impact of oil prices feeding through to petrol prices, as they tend to do at the moment. As well as being based on a non-existent windfall, the Oppositions proposal would make it incredibly difficult to forecast the public finances, given the notorious volatility of the world oil price.
Since the beginning of this year, the oil price has varied between $146 and $86 a barrel. In one day alone, it increased by more than $10. Assuming that the Oppositions proposal would involve changing the fuel duty rate by 1p a litre for every $6, as they said, we would have had to change the fuel duty 25 times since the Budget 18 weeks ago. That is a ridiculous policy. Nor is there any guarantee that the duty reductions would be passed on in full to consumers.
Now that the Tories have their press release out, they have many questions to answer about their fuel duty destabiliser. Is it a pledge? Is it policy or just warm words? I notice that they are consulting on it. Does that mean that they will quietly drop it when they hope no one is looking, or can we add another £2 billion to £3 billion to the black hole in their finances? If it is policy, why on earth did they not vote for new clause 4 in the Finance Bill on 15 May?
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