Fuel Duty (Northern Ireland)

Chloe Smith Excerpts

Wednesday 22nd February 2012 Westminster Hall

[The Economic Secretary to the Treasury (Miss Chloe Smith)]

I congratulate the hon. Member for South Down (Ms Ritchie) on securing the debate and on presenting her case so eloquently. The debate is clearly well attended, with members of the Select Committee on Northern Ireland Affairs present, which puts me in mind of an extensive session that we had in the past few weeks discussing fuel fraud in Northern Ireland. I wonder whether that serious economic issue in Northern Ireland, which we all recognise, will also occupy the hon. Lady, if she has any spare time.

The first issue raised by today’s debate is what the Government have done to assist motorists and businesses in a time of high oil prices. Secondly, I will go on to what we intend to do, before returning, as requested by the hon. Lady, to some details about the fair fuel stabiliser. Before dealing with those two areas, I acknowledge what she said about the difficulties of living, working and running businesses in a rural economy, in particular given the absence of other large businesses whose decisions might be able to bring about cheaper fuel points of purchase. I live in Norwich and am conscious that I can access cheap fuel partly because of the availability of a number of large supermarkets competing with each other on price. She might not be in that position.

I note also what the hon. Lady says about public transport, although I regret that I am not a Transport Minister and cannot assist her directly today, and that she might be floating the idea of co-operation on tax matters between north and south on the whole island of Ireland. I do not know whether she is suggesting that and I hear what she is saying, but that is not something that we think that the British Treasury should necessarily do, and I am not entirely sure that the Republic would wish to do so either.

[Ms Ritchie]

I was referring to a discussion between the British and Irish Governments about harmonisation on fuel duty and about the problems encountered by people on both sides of the border, living in close proximity and able to travel with great speed from north to south, and vice versa. At the minute, prices in the south are lower than they are in the north. What amelioration can be brought to the people?

[Miss Smith]

I understand that point. The topic could be on a long list of what the two Governments discuss, and I note positive aspects of those discussions in the realm of transport, such as acknowledgement of the importance of the land border in setting air passenger duty rates, of which the hon. Lady must be aware. We also acknowledge the significance of the land border to fuel fraud—returning to that important subject—but there is a point to stop short of in harmonising tax rates.

I shall plough on swiftly with some helpful points. First, there is absolutely no doubt that the cost of fuel remains difficult for families and businesses up and down the country, as demonstrated in the debate. I am also sure that many of the hon. Lady’s constituents joined the 100,000-signature petition delivered to the Government last autumn and to which we responded in the House. Our response—indeed, I personally responded —recognised that the price of petrol, which is different from the rate of duty, is extraordinarily high in many people’s eyes. The price is the result of a combination of the duty and various global factors, which she has already mentioned, so it is not fully in the control of the Government to say, “The total cost of your litre of fuel shall be this.” What a responsible Government must do, however, is listen, consider and respond.

The Government have eased the burden on motorists by £2.5 billion up to 2012-13. We started by cutting fuel duty by a penny per litre from 6 pm on Budget day. We cancelled the previous Government’s fuel duty escalator and introduced the fair fuel stabiliser, which I shall come on to shortly. Our response also includes the deferment of last month’s duty increase to August and the cancellation of the original increase planned for August, ensuring genuine help for motorists through only one inflation increase this year. The fuel duty changes support motorists throughout the country, including Northern Ireland—I do not see a distinction—because any motorist can be approximately 10p per litre better off as a result of our Government’s actions. The hon. Lady asked me to acknowledge businesses. An average haulier will be better off by £4,400 because of our fuel duty and vehicle excise duty actions, which I am sure she will welcome in her part of the world, as everyone else does.

[Mr Robin Walker (Worcester) (Con)]

Will the Minister give way?

[Miss Smith]

I am terribly sorry, but I must proceed.

The hon. Lady asked me about how the Government might seek to manage the effect of oil prices in the longer term, and I want to give a few details about the fair fuel stabiliser. The Chancellor has been clear that we cannot take risks with the public finances, although the hon. Lady spoke several times of the Treasury needing to shoulder its share of the difficulties faced by the country. Government coffers, however, are public coffers. The Treasury has employees, but there is no separate entity known as the Treasury that could or could not be shouldering a share. The Treasury simply has a role in managing, as best it can, the public resources to which we all contribute, whether we be citizens, motorists, businesses or any other category that anyone can think of.

My point about the fair fuel stabiliser is that any support we provide to the motorist needs to be paid for. As oil and gas production is more profitable in times of high oil prices, it is fair for companies to make an additional contribution. As part of the stabiliser, therefore, the supplementary charge on oil and gas companies was increased in the Budget, meaning that when oil prices are high, fuel duty will increase by inflation only. If the oil price falls, we will reintroduce the fuel duty escalator and reduce the supplementary charge on a staged and affordable basis.

Coming swiftly to a conclusion to allow us to finish on time, I assure hon. Members that, beyond fuel duties, the Government remain fully committed to working with the Northern Ireland Executive to achieve the common objective of rebalancing the Northern Irish economy, to which the hon. Lady referred. Colleagues are aware of wider work looking at how best to achieve such rebalancing, including the ministerial working group chaired by my colleague the Exchequer Secretary. I understand that the group is making good progress and is due to meet again in early March.

We have recognised the impact of record prices on businesses and families, whether on the mainland or in Northern Ireland. The previous Government had no credible plan to deal with the debts that they created or with motorists, as shown by the escalator that they sought to continue. We, by contrast, have listened and responded: we cut fuel duty, we scrapped the escalator and we have ensured that there will be only one inflation-only increase in fuel duty this year. We continue to have a long-term plan for support in the form of the fair fuel stabiliser. I think that the hon. Lady will agree that that is a reasonable position to be in considering the difficulties faced by this whole country, given the resources left to it by the Government represented by the hon. Gentleman sitting to her left, the hon. Member for Ealing North (Stephen Pound).

Question put and agreed to.