Fuel Prices and the Cost of Living

Andrew Bingham Excerpts

Wednesday 16th March 2011 Commons Chamber

[Ian Murray (Edinburgh South) (Lab)]

It is a pleasure to follow the hon. Member for Worcester (Mr Walker), who talked about disingenuous and spurious policies. I am sure it was disingenuous to promise not to increase VAT before the general election and then to increase it immediately after it. There is nothing more disingenuous than lying to the electorate.

I would like to follow my hon. Friend the Member for East Lothian (Fiona O'Donnell) in talking about some of the personal stories that have been brought to my attention and which relate to the Opposition motion.

[Andrew Bingham (High Peak) (Con)]

rose—

[Ian Murray]

I would like to make some progress.

My constituents wrote to ask me to bring their stories to the House and put them directly to the Chancellor and the Chief Secretary to the Treasury, so I am disappointed that neither of them is in their place. It shows a real disregard for this place when those two senior Ministers are not present to debate such an important issue. Of course the two Ministers on the Treasury Bench are among my favourites, but it would have been nice for my constituents to have had a response directly from the horse’s mouth.

Let us examine what fuel price rises are doing to the cost of living. I shall start with the case of a constituent in Edinburgh South who runs a small business. Let us look at what these particular fuel increases are doing to growth in the economy; in so doing, I shall echo some of the points made by the hon. Member for Worcester. My constituent runs a business in the service sector, so she uses a lot of suppliers. However, suppliers’ price increases are going through the roof, mainly because of additional fuel costs. She told me that some of her suppliers were charging as much as an additional £5 per delivery to cover their own increased fuel charges. My constituent faces a dilemma of what to do about that £5 increase. Should she pass it on to her customers? She finds doing so difficult. Why? Her problem is compounded by the fact that VAT has increased from 17.5% to 20%, which has also impacted directly on prices to her customers.

--- Later in debate ---

[Nigel Mills (Amber Valley) (Con)]

It is a pleasure to be invited to speak in the debate, and a pleasure to follow the hon. Member for Edinburgh South (Ian Murray), who made a passionate if somewhat partisan speech. The Opposition’s problem is that out there in the country no one believes a word that they say about this topic. We all know of their record during 13 years of government, but, just in case a reminder is needed, let me point out that when they took office in 1997 the price of a litre of unleaded petrol was about 56p, which included 43p of duty and VAT. When they left office nearly a year ago, the price was about £1.20 a litre, including tax amounting to about 75p. We hear talk of fuel duty rising “ahead of inflation” or “in real terms”, but if the price of petrol had risen in line with RPI throughout Labour’s term of office, it would have been 80p a litre at the last election rather than £1.20. That is the hike that we have all had to suffer.

As the contents of my inbox make very plain, fuel price rises are a real problem for people and businesses throughout my constituency. In many areas people have no alternative to driving a car if they want to go to work, but the fuel price rises are preventing them from being able to afford to go to work—let alone the damage that they are doing to all manner of small businesses all over the constituency. The Government must take action in next week’s Budget.

[Andrew Bingham]

As a fellow Derbyshire Member, I agree with everything that my hon. Friend is saying. Does not the rural character of both his constituency and mine, High Peak, exacerbate the pressures and difficulties experienced by small businesses, in particular?

[Nigel Mills]

I am grateful for that intervention from a fellow Derbyshire Member, and I entirely agree with him.

The hon. Member for Bassetlaw (John Mann), who is no longer in the Chamber, said that all Governments had chosen to increase fuel duty over the years. We must accept that it was our Government who, nearly 20 years ago, introduced the fuel duty escalator, but the aim then was to encourage people to improve their behaviour by driving smaller and more fuel-efficient cars and considering alternative means of transport. I think we can tell the Government that we have all got that message. Many of us have started using diesel and have bought cars with smaller engines in an attempt to cut our spending on fuel. I know that many of my constituents have done that. However, the scope for such measures is limited, as many people still cannot afford to drive a car. If the nudge is the order of the day, I think that we have got the message and do not need any more nudging.

--- Later in debate ---

[Andrew Bingham]

Is my hon. Friend aware that this is the 10th spending pledge that Labour has made from this banking levy? It has spent that money 10 times—is that not typical of the overspending and double-counting of its years in government, which got us into this mess in the first place?

[Claire Perry]

My hon. Friend makes an excellent point. The shadow Chancellor’s predecessor referred to a financial primer that he felt he should read. Might I suggest that the current shadow Chancellor should borrow a copy? I would be delighted to lend him my calculator because I think that a financially literate Opposition would be a quality Opposition and one that the country would welcome.

I find this muddled and inaccurate motion extremely worrying because it is illegal. The EU directive on VAT states:

“Member States may apply either one or two reduced rates…The reduced rates shall apply only to supplies of goods or services in the categories set out in Annex III”,

but annex III does not list road fuel and other amending articles do not permit a reduced rate or an exemption to be applied to transport fuel. Even if we wanted to do this—if the motion were passed—it would be impossible. This is yet another inaccurate attempt to create a political narrative that joins words such as “bankers”, “tax” and “too far too fast”, but does nothing to address the fundamental problem that the Labour Government left, which we are having to clear up. I do not know about you, Mr Deputy Speaker, but people in my constituency are sick to death of this political posturing and narrative.