Fuel Prices and the Cost of Living

Cathy Jamieson Excerpts

Wednesday 16th March 2011 Commons Chamber

[Stephen Williams]

My hon. Friend makes a powerful point about the price of heating oil, which many households in rural communities have no choice but to use.

The first challenge is how to respond to the pressures on household budgets that I was describing. The coalition Government have said that their priority is to ensure that as we make difficult decisions, the poorest and most vulnerable households are protected. We have already made progress on reducing income tax for the lowest-paid, and I look forward to further progress being made in the Budget. We have a triple lock in place for pensioner households and we are going to introduce work incentives in order to tackle worklessness, which is the major cause of poverty in our country.

However, we also have to tackle the deficit. We have been waiting 10 months for a specific proposal from the Labour Opposition on tax, and this motion is the first detailed one that we have received. The critique that we have heard repeatedly from them is that they want fewer cuts in public expenditure and more emphasis on raising tax, yet their first detailed proposal is for a reduction in tax. In effect, this is another uncosted spending pledge. The hon. Member for Wallasey (Ms Eagle), who led for the Opposition, rightly said that the increase in VAT represents about 3p on the pump price that we all have to pay. We know that each penny of that pump price raises about £500 million for the Exchequer, so the motion is proposing a £1.5 billion spending pledge. However, the Opposition cannot tell us, other than in an allusion in the motion to the banking levy, how on earth they are going to find that £1.5 billion. As has been said, they are in effect proposing a new VAT rate of 17.5%, but they know that under international law, they cannot do that.

This duty as a whole raises about £30 billion as a contribution to reducing the deficit, and it makes up about 62% of the pump price. That is a considerably lower proportion than a decade ago, when the share of the pump price represented by taxes was in excess of 80%. I well remember, when I was on the Opposition Benches and the Labour party was in government, that the person who is now leading the Labour party had much promise when he became Energy Secretary. He certainly talked a good talk in that post, although he was perhaps making up for the rather “brown” years of the Labour Government. Now that he is in opposition, we find that his words were hollow and he has moved on to opportunist ground.

We need to move to a transport system that is more sustainable, with more efficient engines, a different mix of fuels, and electric cars, as proposed in the coalition agreement. As our dependency on hydrocarbons declines, we also need to move to a completely new fiscal model for taxing the use of road space, because road fuel duty and vehicle excise duty are a blunt fiscal instrument.

[Cathy Jamieson (Kilmarnock and Loudoun) (Lab/Co-op)]

I have listened carefully to what the hon. Gentleman has been saying, and I was very interested in some of his points. What would he say to the family in the rural part of my constituency who live a mile and a half up a farm track, who have no access to public transport and who cannot wait for the kind of interventions that he is talking about to come along somewhere down the line? Does he support the Government reconsidering in the Budget the fuel duty rise that is due?

[Stephen Williams]

I do not know whether the hon. Lady was listening at the time, but I acknowledged right at the start of my speech that the pressures in rural constituencies are much harder than those in my urban constituency; I have been made fully aware of that by my colleagues. I do not know the details about her constituency, but I certainly empathise with the situation and I am sure that the Government will respond to what she says.

As I was saying, I wish to see a move towards a more sustainable model for taxing motoring and haulage in our country—road pricing, which would make us better able to respond to changed circumstances. But that is the future, and what we have to do now is respond to the genuine concerns of our constituents and motorists up and down the country. It is only a week before the Budget, and although the Chancellor is not in his place I am sure that he is carefully listening to and being informed by his colleagues about what is being said in this debate. I am sure that when he does respond to those pressures and demands from around the country, he will do so in a way that is not fiscally reckless, is environmentally sustainable, and certainly does not follow the opportunistic advice in the motion.

--- Later in debate ---

[Mr MacNeil]

I have every sympathy for the people of West Dunbartonshire—those are high prices—but with our prices of £1.48 and £1.50 a litre, I wish that we could enjoy prices such as £1.36 a litre. If I went back to the Outer Hebrides tomorrow and announced a price of £1.36, I would be regarded as some sort of hero, but unfortunately I cannot do that. I have sympathy with the hon. Lady but I am afraid that she must reciprocate and understand the problems that come when fuel poverty is higher, the cost of living is higher and wages are lower. The pilot project in the Outer Hebrides and other islands in Scotland is the right way to go. If it is a success, I hope we can extend it. I find the lack of sympathy from Labour Members about the problems in the Outer Hebrides somewhat distressing.

[Cathy Jamieson]

Having visited the hon. Gentleman’s constituency in the past, I understand some of the difficulties his constituents face, but does he agree that although we are talking about derogations, stabilisers and all sorts of things people want action now and that there is an opportunity for the Government to act next week? Will he support the Labour motion today to ensure that the maximum pressure is piled on the Government?

[Mr MacNeil]

I probably will support the Labour amendment, but at my own risk. I am grateful for the hon. Lady’s words. She is very welcome back in Na h-Eileanan an Iar at any time of her choosing. I would be more than pleased to show her around the islands or to entertain her in Stornoway—at my expense.

I must wind up, because I have to speak at a meeting at 3 o’clock about coastguards, which are a very important issue in my constituency. The last time I spoke about this issue I said that the rural fuel derogation was not like Christmas because Christmas had been and gone. It seems to me that it will not be like Easter either, because it looks like Easter will also come and go while we are still waiting.