Fuel Prices

Duncan Hames Excerpts

Thursday 13th September 2012 Commons Chamber

[Robert Halfon]

I am going to make a little more progress.

Returning to the point I was making, slowly the smaller firms are squeezed out of business. Then, the “own brand” stations put their prices up. This is exactly the same kind of anticompetitive stranglehold that breweries have over pubs, as we have heard in this House.

In my constituency of Harlow, some garages are charging 140p for petrol and 144p for diesel, which is a full 10p more expensive than the cheapest forecourts in the UK. The same complaint was made in Germany about five oil wholesalers who are active in the UK. Germany’s Federal Cartel Office—Bundeskartellamt—acted quickly, and opened a criminal investigation. Why cannot we do that here in Britain, too? Austria has actively started regulating its fuel markets, and the AA has noted the impact of that in respect of keeping fuel prices down. If the oil companies have nothing to hide, they could opt for open-book accounting, and be much more transparent.

[Duncan Hames (Chippenham) (LD)]

I congratulate the hon. Gentleman on securing the debate. Has he noticed the practice of retail outlets to offer cut-price fuel two days a week, which they sometimes do while also offering fuel at a higher price than only a week ago? This kind of excessive volatility in oil prices seems deliberately designed to confuse motorists so as to make it as hard as possible for them to shop around for the cheapest fuel.

[Several hon. Members]

rose—

--- Later in debate ---

[Justin Tomlinson (North Swindon) (Con)]

I congratulate my hon. Friend the Member for Harlow (Robert Halfon), who has a fantastic track record of leading on this extremely important issue. This is yet another debate in which I am pleased to support him. I am also proud to be a member of the FairFuel UK and PetrolPromise campaigns, which are bringing this issue to the forefront.

Petrol prices have been increasing for decades under the twin pressure of rises in fuel duty and oil prices. The previous Labour Government hiked fuel duty 12 times in 13 years and it always amazes me that the Opposition are in such denial about that. They were very quick to take credit when they increased spending on public services, so they should also take credit for how they paid for it. With uncertainty in the middle east and limited resources, global oil prices will continue to rise. Together, those factors have stretched motorists to breaking point, so that many of them are priced out of their cars and businesses struggle with additional costs.

I welcome the Government’s move to scrap Labour’s further six planned rises and the modest but welcome 1p cut in fuel duty. Fuel is about 10p cheaper than it would have been had the former plans gone through, which more than covers any changes under VAT.

I accept that the wrecked economy we inherited means that money is tight and that we cannot just wave a magic wand. I surveyed the good people of my constituency, however, and asked them what their priority would be if they were Chancellor and suddenly inherited some money to play with. The choices were VAT, income tax, inheritance tax, capital gains tax, corporation tax or fuel duty. Fuel duty was by far the most popular, by a significant distance. I asked residents why that was the case, and I will use the Government’s changes to income tax thresholds to illustrate my point. The changes to income tax were welcomed because they took 2 million people out of paying tax altogether and benefited 24 million others. However, people could not say how much they had benefited personally, but the one tax they could describe was the cost of fuel, which is a clearly displayed, tangible cost. If we do one thing to kick-start and boost consumer confidence, it should be to cut fuel duty. My plea to the Chancellor is this: as and when he finds the money, a cut in fuel duty should be the No. 1 priority to boost the economy.

[Duncan Hames]

My constituent, Michael Hudston, campaigns assertively on this issue and he is acutely aware of how much tax he pays. When he fills up at the pump, he pays an effective rate of tax of 146%. Interestingly, three years ago it was as high as 200%, which demonstrates the point my hon. Friend was making, which is that, so far, tax changes have not made the situation worse in the way alleged by Labour Members.

[Justin Tomlinson]

I thank my hon. Friend and agree with his comments. I remember that on the day of the 1997 general election—not a particularly happy memory for the Conservative party—I paid 57p a litre to fill my car.

My hon. Friend the Member for Harlow presented evidence about how the oil industry is acting, and how it is quick to pass on any rise in oil prices but slow to pass on cuts, and all parties are united in the belief that much needs to be done. The statistic given was that for every 10p fall in the wholesale price, an average of 7p is passed on to the consumer. I therefore welcome the decision by the Office of Fair Trading to investigate the actions of the oil market. All local residents will be keen to know whether they are being defrauded and ripped off, which I think we all suspect is the case.

We must accept that we will not see cuts to fuel duty in the short term, and that world oil prices will continue to rise. As demand grows and resources are limited, pressure will increase and we must look at the alternatives. I welcome the fact that in my constituency, Honda UK, in conjunction with BOC, has taken advantage of Government grants and created the first open-access hydrogen refuelling station. My hon. Friend the Member for South Swindon (Mr Buckland) and I lobbied hard to ensure that that remains in place. The key for those alternatives is the availability of refuelling infrastructure for all the different resources. We must invest in those alternatives so that we can deal with the pressures that I have mentioned.