Motoring Fuel Costs

Andrew Percy Excerpts

Tuesday 14th June 2011 Westminster Hall

[Andrew Percy (Brigg and Goole) (Con)]

I thank my hon. Friend for giving way. He is being very generous. The hon. Lady’s point about the Federation of Small Businesses is important, but we must not underestimate—my hon. Friend is not doing so—the impact of fuel prices on workers. My constituency has a low-wage economy in a large rural area, and an announcement was made today that the Humber bridge tolls will rise to £3 for each crossing. That will conspire to put people off looking for work, because they cannot afford to get to work.

[Robert Halfon]

That is my whole point. High fuel prices have become part of the poverty trap, and are a disincentive for people to get back into work, despite the Government’s excellent programmes, including the Work programme. I thank my hon. Friend for raising the matter.

Long-term stats from the Department of Energy and Climate Change show that in 1970 we used 25 million tonnes of petroleum in the transport sector. That has risen year on year, and doubled to 50 million tonnes today. But despite the UK being a net exporter of petroleum products, and despite the fall in the international oil price, our petrol prices are still sky high. In January this year, members of the Federation of Small Businesses said that if petrol prices continue to rise, 62% will be forced to increase their prices, risking inflation; one in 10 may have to lay off staff; 26% will be forced to freeze wages; 36% will have to reduce investment in new products and services; and 78% will see

“their overall profitability in jeopardy”.

Taxation is only part of the problem, and another major concern is transparency. As the AA, RAC, and FairFuelUK have said, if the 2p drop in the market cost of petrol had been passed on to motorists earlier this year by energy companies, it would have wiped out most of the impact of the 2.5p VAT rise. In May, I wrote to the chief executives of Shell, BP, Total, and ExxonMobil asking for price transparency so that we can see why prices are not falling. So far, only Total and BP have replied, but their replies essentially said, “Nothing to see here.”

In 2009, before the disaster in the gulf of Mexico, BP boasted profits of £8.7 billion. This year, Shell has reported first quarter profits up 40%, making its global profits nearly £2 million every hour.

--- Later in debate ---

[Justine Greening]

I say, “Me too” to that. We are working with the European Commission, and once we have clearance, we will get on with the pilots as soon as possible. We are keen to make progress on the issue, and I assure the hon. Gentleman that we are working and making our case in Europe. We must get agreement from the Commission, and unanimous agreement from European Finance Ministers. Once we have that agreement, we will be pushing on with the pilot schemes.

[Andrew Percy]

If we left the European Union, we would not need that permission—that is a debate for another day. I have some concerns about the rural fuel derogation applying in some areas but not in others. Rural areas such as my constituency have a low-wage economy. We have poor bus services and high toll-bridge costs—I know the Minister is committed to doing something about that, which is pleasing. A rebate should not apply to one rural area but not to others; we should be careful about doing that.

[Justine Greening]

We need to help families across the board. That is one reason why raising the personal tax allowance was critical—in any other Budget that measure would have got a huge amount of attention, but perhaps because of the other things we did, it got less consideration. The provision will benefit the lowest paid workers, and this year’s rise in allowance, together with that of next year as announced in the Budget, will take 1.1 million people out of paying income tax altogether. We are right to have a targeted package to help motorists, and we know how important that is. We are also right to make progress on our commitment to increase the personal allowance. Such a measure will help many of those who feel the pinch most when the cost of living goes up.