Fuel Costs

Brian Binley Excerpts

Monday 7th February 2011 Commons Chamber

[Stewart Hosie]

I shall move on a little. I have been generous, and I will give way again in a little while.

I was talking about the impact on business and the information provided by the FSB. As I said, 78% of its members who were surveyed in January said that the increase in duty would have an impact on them and put business profitability in jeopardy, which is the wrong thing to do when we are trying to grow our way out of recession. I would have thought that this Government would want to listen to the views of the FSB, not least because small businesses in the UK provide 90% of all our enterprises, and in Scotland they provide 50% of all jobs. They will be engines of recovery in this country.

John Walker, the UK chairman of the FSB, and Andy Willox, the FSB’s Scottish policy convenor, said:

“Scottish small businesses want to grow, innovate and create employment but the cost of fuel puts the brakes on their ability to drive the recovery…Every extra penny spent at the pumps is a penny not being spent elsewhere in the economy and our members are finding it hard to plan for the future, as well as survive the present, due to the spiralling cost of fuel.”

[Mr Brian Binley (Northampton South) (Con)]

I am most grateful to the hon. Gentleman for allowing me to interject a little on the question of small and medium-sized business. I agree with his thrust that they are vital and that they will provide the jobs growth that the growth agenda requires. However, will he join me in expressing concern that the four increases in fuel duty are not as necessary as we were told they were by the then Government? Does he agree with that?

[Stewart Hosie]

I believe that the SNP opposed a number of the fuel duty increases. The hon. Gentleman may have been an honourable exception—I hope he was—but my memory tells me that Tory FrontBenchers abstained on some of those increases over the past few years when they were in opposition. He is generally right, but as I said, the debate is not about the cancellation or postponement of a single increase, however welcome that is, but about the implementation of a permanent stabilisation mechanism. Mr Willox said of that debate that:

“The FSB is right behind all moves to introduce a fuel duty stabiliser.”

--- Later in debate ---

[The Exchequer Secretary to the Treasury (Mr David Gauke)]

This has been an interesting debate, and I thank all hon. Members who have contributed. Fuel prices are undoubtedly of significant concern to hon. Members and the wider population.

It is fair to say that the issue is not new. My hon. Friend the Member for Caithness, Sutherland and Easter Ross (John Thurso) has referred to this debate being like “Groundhog Day”. He is a long-standing participant in debates on this subject, and he is influential in setting out the arguments for a rural derogation, to which I shall turn later. He also set out further proposals that may influence this debate in the years to come.

At the moment, there is a particular concern about fuel prices. We have heard today from hon. Members from all parties and from all parts of the United Kingdom about the difficulties that their constituents face because of rising fuel prices. It appears to cost more every time that people fill up the car, and the public understandably want us to do something about that.

[Mr Binley]

I have a message for the Economic Secretary from hauliers in my constituency, such as Wrefords and Butts. They understand what the Government need to do to put the deficit right, but they urge him to do something that was in our manifesto, namely bring forward a stabiliser. They do not understand why we have not done it already.

[Mr Gauke]

I will turn to the stabiliser in a moment. My hon. Friend has touched on a point that my hon. Friend the Member for Morecambe and Lunesdale (David Morris) and my hon. and learned Friend the Member for Sleaford and North Hykeham (Stephen Phillips) also raised, which is the deficit that we face. It is only by coming up with a credible plan to balance the books that we have managed to create the confidence needed for a recovery. To get there, we have had to make some tough decisions, such as raising certain taxes, including VAT, and cutting public expenditure in the teeth of opposition from the Labour party to all our plans.

One of the few things that we inherited that would reduce the deficit were the previous Government’s plans to increase fuel duty. We heard quite a lot from the Opposition spokesperson, the hon. Member for Bristol East (Kerry McCarthy), about VAT. It is worth pointing out that the Labour Budgets of 2009 and 2010 involved the following increases in fuel duty: in September 2009, there was a 2p increase; in 2010, there was a 2.76p increase; and there are 1p increases in 2011, 2012, 2013 and 2014. In total, the increase is about 9p a litre. We cannot dismiss those increases without knowing how we can fund any shortfall.

As the Prime Minister said over the weekend, we

“would love to see tax reductions…but when you’re borrowing 11% of your GDP, it’s not possible.”

So although I sympathise with the points made by hon. Members from all parts of the House, our decisions on tax must be viewed in that context, where every penny we increase fuel duty by raises an additional £500 million and if we cut fuel duty, that money will have to come from somewhere else.