Fuel Prices and the Cost of Living

Debate between Brandon Lewis and Angela Eagle

Wednesday 16th March 2011 Commons Chamber

[Brandon Lewis (Great Yarmouth) (Con)]

rose—

[Ms Eagle]

Let me finish my sentence. It is absolutely the case that it was Conservative Chancellors of the Exchequer who first introduced the fuel duty escalator.

--- Later in debate ---

[Ms Eagle]

One has to remember that the price of petrol at the election was £1.20 a litre, at a time when the Conservatives were promising to cut 10p off the price of a litre because petrol prices were too high. It is now £1.32 a litre.

[Brandon Lewis]

rose—

--- Later in debate ---

[Brandon Lewis]

I thank the hon. Lady for being so generous in giving way. Will she confirm that, despite what has been said, my hon. Friend the Member for Dover (Charlie Elphicke) is right: there were 12 fuel duty rises under the Labour Government, and six more were set to come into force before they left office and would have done in the next few years?

[Ms Eagle]

As I said, we had six years when we did not even increase the price of fuel by inflation, so there were real-terms price falls. The number of increases in all sorts of duties tends to expand the more one is in government. We will see what this Government do in the Budget next week.

--- Later in debate ---

[Ms Eagle]

No, let me finish. The Chief Secretary rejected calls to scrap the 1p increase, saying that he was not prepared to “sacrifice income willy-nilly” to help motorists. That is the Chief Secretary who is not at this debate. Perhaps Conservative Members should be asking him their questions. He proceeded to champion the fuel derogation for remote islands, which will help just a third of 1% of Great Britain’s almost 34 million registered vehicles and 60 million people. To be fair to him, he has battled for 10 months to get that policy up and running and, showing the energy and drive for which he is famous, he has managed to get around to asking the EU for permission to think about doing it. That is a perfect example of a policy from this Government: it generates a satisfyingly large amount of headlines, helps virtually nobody and costs almost nothing.

Meanwhile, the Chancellor asked the Office for Budget Responsibility to undertake an assessment of the effect of oil price fluctuations on the public finances, in order to design a stabiliser mechanism. It produced that assessment last September.

[Brandon Lewis]

rose—

--- Later in debate ---

[Ms Eagle]

I have given way to the hon. Member for Great Yarmouth (Brandon Lewis) already.

The Office for Budget Responsibility produced the assessment last September, and it failed to make the numbers stack up for the policy. It calculated that the overall effect on the public finances of a temporary oil price rise would be close to zero, and that a permanent rise would create a loss to the public finances. In other words, there is no windfall for the Treasury to redistribute using a so-called fuel duty stabiliser mechanism.

No one appears to have told the Prime Minister about that and he clearly has not bothered to read the OBR report, because at Prime Minister’s questions a couple of weeks ago, he promised a fuel duty stabiliser in the Budget:

“we will look at the fact that extra revenue comes to the Treasury when there is a higher oil price, and see if we can share some of the benefit of that with the motorist.”—[Official Report, 2 March 2011; Vol. 524, c. 300.]

The Daily Telegraph called that statement “misleading and economically illiterate”. I could not have put it better myself.

[Brandon Lewis]

rose—