Fuel Prices

Elizabeth Truss Excerpts

Tuesday 15th November 2011 Commons Chamber

[Nigel Mills]

I am tempted to say that I will give way again to the hon. Gentleman if he will tell us whether he voted against the VAT rise. We have heard a great deal of concern expressed today about the VAT rise, but it is surprising that those feelings are so strong, given that most Members did not vote against it. We have often said that we had to introduce that increase in part to fix the mess that Labour left for us. If the hon. Gentleman wants to take away that £12 billion or £13 billion of tax revenue, he will have to find a way of replacing it. I shall return to the question of fuel prices before I run out of time.

The point has been well made that this issue is all-pervasive, in that fuel costs affect everything that we buy. Today the headlines are telling us that inflation has fallen to 5%. Who on earth would have thought that we would be reading such headlines? The last thing that the Government want to do is put up fuel prices, which would affect everything that we buy, thereby pushing up inflation again.

[Elizabeth Truss (South West Norfolk) (Con)]

Does my hon. Friend agree that the situation is particularly difficult for people living in rural areas? One of my constituents who was unemployed has found a job further afield. He is earning £17,000, but he is spending £3,000 of that on petrol.

[Nigel Mills]

I absolutely agree with my hon. Friend. I have similar situations in parts of my constituency. Petrol prices are much higher there than they are in large cities. I have perhaps had a bit of luck recently in that Asda has opened a branch in the past year, which has pushed some petrol prices down a little—not that I like to pay tribute to supermarkets all that often.

Governments of both parties have spent nearly 20 years putting up petrol prices, and they have justified that in part by saying that it would encourage us to change our behaviour by buying smaller cars and driving less. Well, I think we have all got that message now. I have a smaller car that does many more miles to the gallon, as have most of my constituents, and many of the businesses that I talk to have reformed the way they transport their goods in order to reduce the number of lorry loads. The message is already out there, and we do not need any more nudging. We all understand it, and there is little more that we can do. For many people, their journeys are essential, and we risk pricing them off the road and out of economic activity completely.

The price of fuel is high. In fact, the underlying price—excluding the duty—has increased by about 20% over the past two years. There is no need for an inflationary rise in the duty to ensure that the price goes up in line with inflation, because the price has already risen by that amount. I cannot see any justification for a price rise on that basis. The only argument left for a further fuel duty increase is the fact that we need tax revenue, but this would be an especially bad way of generating that revenue, given the damage that it would do to our economy at this difficult time. I therefore urge the Government to scrap the rises that are planned for next year, and to try instead to find a way of reducing the duty in order to stimulate the economic activity that we need.

--- Later in debate ---

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

I very much welcome the opportunity to debate this motion and I shall happily correct a few points that the hon. Member for Pontypridd (Owen Smith) has just made. Most importantly, this is a chance to listen to and consider the contributions of hon. Members on both sides of the House. I congratulate my hon. Friend the Member for Harlow (Robert Halfon) on securing the debate and moving the motion and I apologise to him for missing a few minutes of his speech initially. Let me take this chance also to congratulate the Backbench Business Committee and the 100,000 and more petitioners who have put this issue forward for debate today. Unlike many Opposition Members, I do not disparage the motion. I respect this as an avenue of democracy.

Even though average pump prices have fallen over the summer, there is little doubt that the cost of fuel remains a very difficult issue and a concern to many families and businesses across the country—and, indeed, to young people. The hon. Member for Wells (Tessa Munt) mentioned students and the Youth Parliament. Let me say for the record and for the hon. Members for Pontypridd and for East Lothian (Fiona O'Donnell), that both my primary and secondary schools were comprehensives. I fully respect the needs of all those across the whole of society.

[Elizabeth Truss]

Does the Minister agree that many people in rural Norfolk where she grew up will struggle to find an alternative to using their car, and that we need to reflect that in our policies?

[Miss Smith]

I welcome that point from my hon. Friend and near neighbour. I should like to reassure her constituents, as well as motorists up and down the land, whether they are in rural, suburban or urban areas, that this Government have listened to their concerns and will continue to do so. However, today is not the day to try to change taxes—that is for the Budget. Today is to listen.

From our first Budget last year—indeed, from when we were in Opposition, when we said, as the hon. Member for Pontypridd has pointed out, that we would introduce a fair fuel stabiliser—this coalition Government have listened and acted. In the Budget in March, we announced a £2 billion package to support motorists at a time of record pump prices. However, the Labour party, including the hon. Gentleman, whom I do not believe was there at 4 am when many of the rest of us were, failed to support that package, which was supported by the Federation of Small Businesses on behalf of, for example, van drivers.

Before I come to specific points raised in the motion, I will explain why the Government took the action that they did in the Budget.