Fuel Costs

Lord Murphy of Torfaen Excerpts

Monday 7th February 2011 Commons Chamber

[Paul Murphy (Torfaen) (Lab)]

I welcome the debate, and the hon. Member for Dundee East (Stewart Hosie) made a powerful speech. It is relevant that it arises on a Supply day motion from the Scottish National party and Plaid Cymru, because the issue is also of particular concern to Northern Ireland, and the hon. Member for Belfast East (Naomi Long) is in her place. All devolved Administrations have a voice to raise and a point to make about the fuel increases in their countries. Hon. Members will know that a joint ministerial Committee meeting took place last week in London, when the First Ministers of Wales, Scotland and Northern Ireland jointly asked the Government to ensure that there would be no increase in fuel prices in the Budget in April. I hope that that will be the case.

I share the concerns of my hon. Friend the Member for Bristol East (Kerry McCarthy) about some of the detail of the derogation for rural areas. I support the idea of a pilot, but it should include at least one part of Wales, and to confine it to islands would make such a study rather artificial. I appreciate that there are particular problems in rural parts of the United Kingdom and it is important to consider that, but confining the pilot to islands would be a mistake.

[Naomi Long]

Does the right hon. Gentleman agree that, if there were a pilot, it would be helpful if a part of Northern Ireland were included in it, given that there are specific problems due to the geographical separation between Northern Ireland and the rest of the United Kingdom?

[Paul Murphy]

Indeed. When I was Secretary of State for Northern Ireland, the point was always made to me that it is the only part of the United Kingdom that has a border with another country—the Republic of Ireland— and the problems of fuel prices in Northern Ireland are particularly acute. It would be a good idea to have a pilot there, too.

The Economic Secretary spent much of her time telling us that it was all the Labour Government’s fault, and then she said that she wanted to be conciliatory. If I may say so, she is slightly schizophrenic about what she wants. Let me emphasise to her that, for the 24 years that I have been in the House of Commons, whether in opposition or in government, the Treasury has always won its case. It has won it on the basis that it wanted the money from fuel—a Conservative Government as much as a Labour Government argued for fuel regulators. There is no point in trying to say that one side or the other is responsible because all Governments in the past three decades have done precisely that.

There is a difference now—and we will differ fundamentally about the reasons for it. Given that we are post banking crisis and have to deal with the deficit, of course the world has changed and we must therefore consider imaginatively ways in which to deal with the fuel prices that our businesses and our families have to pay. However, the Economic Secretary must recognise the point that my hon. Friend the Member for Bristol East made: the single, most devastating reason for fuel price rises in the past few months is the increase in VAT. It is as simple as that. Petrol and diesel are more expensive because VAT has gone up. As all Opposition parties have argued, we should rethink the VAT increase.

The effect of the fuel prices on small businesses in Wales is calamitous. The difference in Wales, as in Scotland, Northern Ireland and parts of England, is that so much of our economy is now based on the success of small and medium-sized businesses. If they are to suffer—it has been shown that they will if fuel prices increase—special attention should be paid to them. The Federation of Small Businesses in Wales has already said that it is disappointed with the Government’s treatment of fuel prices. The Economic Secretary is right to say that devolved Administrations have a part to play in that the Government and the devolved Administrations should work closely with small businesses to see how they can tackle the matter.

Small businesses also deal with other pressures. In south Wales, the Severn bridge is undoubtedly a problem for them. Someone who has a large vehicle such as a lorry and crosses from England to Wales has to pay £17 each time. That is a big disincentive to small businesses in Wales. Earlier, the Prime Minister rightly pointed out that he, like me and every hon. Member, wants banks in our countries to lend more regularly, more frequently and more effectively to small businesses.

The debate is important—so important that hon. Members from all parts of the United Kingdom are taking part in it to ensure that the Government’s mind is bent to trying to find a solution. I fear that the Economic Secretary was right when she said that the fuel stabiliser was a problem—doubtless the Government are looking at it—but there are serious issues, which could have a knock-on effect unless they are tackled effectively and carefully.

In the past couple of days, I went to my local Sainsbury’s petrol station to fill up. Like many supermarkets, it offers diesel and petrol at much cheaper rates than smaller, independent petrol stations. I paid just over £1.30 a litre for diesel. Compared with some of the prices, which we have heard today, in parts of rural Scotland and Wales, the price in my part of the world, although quite high, is lower.

It particularly struck me, when considering the reasons for taking part in the debate, that Shell was making £1.6 million an hour in profits. I know that that is not all on fuel. However it strikes me as incongruous that, when the citizens and businesses of our country have to face huge, inflationary rises because of increases in fuel duty, large oil companies are making those enormous profits. Perhaps the Government can consider that. They were supposed to look at how the banks share out their profits and pay their bonuses. They have not done well on that. Perhaps they should look at some oil companies, too.

Whatever the Government do, they should understand that there is real and justified concern from all Members about the fuel increases. I hope that they will listen.