Fuel Duty

David Gauke Excerpts

Monday 12th November 2012 Commons Chamber

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

We have seen this evening how what might have looked like a clever wheeze to the Opposition on Friday looks opportunistic on Monday and merely exposes their lack of credibility and consistency. That is perhaps a pity: as my right hon. Friend the Member for Wokingham (Mr Redwood) pointed out, the cost of living is an important issue.

I thank my right hon. and hon. Friends for their contributions today—and, indeed, Opposition Members. In particular, I thank my right hon. Friend the Member for Wokingham and my hon. Friends the Members for Ipswich (Ben Gummer), for Waveney (Peter Aldous), for Tamworth (Christopher Pincher), for Cleethorpes (Martin Vickers) and for Witham (Priti Patel) and, perhaps above all, my hon. Friend the Member for Harlow (Robert Halfon), who, unlike Labour, has a record of consistency on fuel duty.

Given the general sense of amnesia on the part of the Opposition, perhaps I can begin by setting out a little of the context, which was the set of policies proposed by the former Chancellor of the Exchequer, the right hon. Member for Edinburgh South West (Mr Darling), for reducing the deficit—his discretionary fiscal tightening. It was a plan seen as inadequate by the International Monetary Fund, the CBI, the Governor of the Bank of England, the credit rating agencies and, judging by the general election result, the British people. In lacking credibility, the plan ran the risk of leading to higher interest rates, and as my hon. Friend the Economic Secretary pointed out, for a mortgage of £100,000, a 1% increase in mortgage rates would lead to an additional £1,000 in mortgage payments.

What did the Darling plan not include? It did not include anything to increase the personal allowance for income tax, which under our policies has resulted in cash savings of £546 for basic-rate taxpayers, or anything on council tax. Our freeze—in contrast to the average 5% increases we saw from Labour—saved average band D households nearly £220. What was actually in the Darling plan? We had an increase in employers’ national insurance contributions—the jobs tax, which was largely reversed by us, although that does not stop Labour calling for cuts in employers’ national insurance contributions. Most pertinent for today, we also saw fuel duty increases, with a 1p increase on 1 October 2010, a further 0.76p increase on 1 January 2011 and then 1p increases in real terms on 1 April in 2011, 2012, 2013 and 2014.

The argument we have heard this evening from Labour is: “It’s all very well; we made the announcement, but we had no intention of implementing those proposals”—that is one for fiscal credibility from Labour. Alternatively, the decision has been completely ignored, so that one could have missed the fact that any scheduled increases in fuel duty are Labour’s proposed rises. Now Labour’s argument is: “We intend to save the nation from our very own policies.” It is as though the last Labour Government never existed, but unfortunately for all of us they did, and we are having to live with the consequences.

We know that high oil prices are causing real difficulties in ensuring that motoring remains affordable. We have listened to hard-pressed motorists and businesses, and we have acted. This Government have acted by easing the burden on motorists by £5.5 billion between 2011 and 2013 and by cutting fuel duty. We acted by cancelling the previous Government’s fuel duty escalator for the rest of the Parliament and by introducing a fair fuel stabiliser, so that fuel duty will increase by inflation only when oil prices are high. We acted to ensure that there will be no increase in fuel duty this year by deferring the next increase to January. That action ensures that duty at the pump will have been frozen for 21 months, and pump prices are now 10p lower than under Labour’s plans. Even following the inflation increase in January, average pump prices could still be approximately 6p a litre lower than if we had implemented the previous Government’s fuel duty escalator in 2011 and 2012. That means that a typical Ford Focus driver will be £159 better off between 2011 and 2013, and that the average haulier will benefit by approximately £4,900 during the same period.

Labour Members argue that we could do more about tax avoidance, but that ignores the fact that under the present Government yield raised by HMRC will increase by approximately 50%. It also ignores the fact that it was their party that voted against proposals to deal with disguised remuneration—a particular form of tax avoidance—which are now saving us £750 million a year. Instead, we hear about umbrella companies that are inflating workers’ travel and food expenses and reducing tax and national insurance contributions.

In an article, the shadow Chancellor—who, of course, is not here today to defend his own policies—wrote of tax avoidance:

“Ministers have failed to take tough action to stop it happening.”

What he did not mention was that the Ministers in question must have been those who consulted on the matter in 2008 and then decided not to change the law. Even four years on, the shadow Chancellor cannot stop himself briefing against the Treasury team of the right hon. Member for Edinburgh South West.

Incidentally, HMRC has strengthened compliance in this area. It has, among other things, won a large case worth £158 million. Moreover, changes in the national minimum wage scored an increase of £90 million, while protecting low-paid workers.

The fact is that it is this Government who are reinvesting money in HMRC, enabling us to secure an additional yield of £7 billion by the end of the current Parliament. It is this Government who are increasing the number of people working in compliance and enforcement in HMRC. It is this Government who are introducing a general anti-abuse rule. It is this Government who have passed legislation to deal with disguised remuneration. None of those measures was introduced by the Labour party when it had the opportunity to do so.

We have recognised the impact that high pump prices are having on motorists, families and businesses. The last Government had no credible plan to deal with the debts that they created and no credible plan to support motorists, but we have listened and responded. We have cut fuel duty, we have scrapped the fuel duty escalator, we have ensured that there will be no increase in fuel duty this year, we will have kept fuel duty frozen for 21 months, we will continue to support motorists with our fair fuel stabiliser, and we have tackled tax avoidance. We taken action not only on fuel duty, but on council tax and on income tax.

The British people know that this is a Government who, within the considerable constraints left to us by the Labour party, will take action to protect them from rising pressures and difficulties with the cost of living. The Labour party has tabled an incredible, opportunist motion. I urge the House to reject it and to support the Government’s amendment, safe in the knowledge that we will do all we can to protect the British people from the rising cost of living.

Question put (Standing Order No. 31(2)), That the original words stand part of the Question.