Taxes on Motor Fuel

Helen Morgan Excerpts

Monday 23rd May 2022 Westminster Hall

[Peter Grant (Glenrothes) (SNP)]

I am pleased to begin summing up this debate. Like the hon. Member for Ellesmere Port and Neston (Justin Madders), the most striking thing about it is that out of around 350 Conservative Members of Parliament, not a single one wants to come and defend the Government’s woeful lack of action on this element of the biggest cost of living crisis that most of us have ever seen—hopefully it is bigger than any that most of us will see again.

I recognise, the SNP recognises, and the Scottish Government certainly recognise, the need to move away from our dependence on fossil fuels. The Scottish Government’s record on the promotion of renewable energy stands up to comparison with anyone else in the world. It is a record that I am proud to have played my own tiny part in, as a former council leader. The simple fact remains, however, that for the foreseeable future we will still depend on petrol or diesel-powered vehicles for a lot of our everyday travel, public transport, and the delivery of goods on which our economy and communities depend. We cannot simply say that the way to deal with crippling increases in the prices of diesel and petrol is to stop using our cars, buses or trains that rely on diesel or other fossil fuels.

There is a massive contradiction here, in that Scotland remains one of the world’s largest producers of oil and gas—we are one of the most fuel-rich countries in the world. How can it be that a supplier country gets poorer when the price of the commodity goes up? Somebody, somewhere, is ripping Scotland off, and I have a pretty good idea as to who that might be.

How can it be, as the hon. Member for Ellesmere Port and Neston asked earlier, that his constituency, which is beside a major oil refinery, has to pay more for fuel than, for example, parts of London? The hon. Member should try looking at the price in the places where fuel is actually produced, and sometimes at the places where it comes ashore, because people in a lot of the more remote parts of Scotland get a double, or even triple, whammy. They have higher fuel prices to begin with, which is ridiculous when they are closer to where the fuel is produced than any of the rest of us, and because they are in sparsely populated areas, they must travel longer distances to get to school, work or a doctor’s appointment. Things that in a city such as Glasgow, London or Edinburgh can be done by walking half a mile, can be a two-hour journey in some parts of the highlands of Scotland. Although the roads might be in a decent condition, they are certainly not designed for fast, constant-speed travel, so fuel consumption per mile on those roads is vastly greater than on roads in more densely populated areas.

That might be why it is noticeable how many dark colours there are towards the north end of the map on the page of the petition. My constituency is uncharacteristically dark—the last time I checked, Glenrothes and central Fife had 224 signatories. My constituents do not tend to get all that excited about Parliament’s online petitions, so that number is quite high. I guarantee that I have had at least that number of emails—probably more—about the fuel-price crisis, and the general cost of living crisis in just the last few weeks, never mind in the months that the petition has been live.

It is important to emphasise that a massive increase in the price of fuel means a massive increase in the price of everything else. Almost everything that we buy in the shops was delivered in vehicles that rely on fossil fuels. Although I welcome the much greater use of electric vehicles by some distribution companies and hauliers, and the attempts by some to introduce hydrogen fuels, the vast majority still rely on diesel to get food to supermarkets. If hauliers cannot afford fuel costs, prices on supermarket shelves will go up even more than before.

[Helen Morgan (North Shropshire) (LD)]

Does the hon. Gentleman agree that some hauliers are unable to pass increased fuel costs on to supermarkets, which have so much purchasing power, and are at risk of going out of business as a result? That puts our supply chain under pressure and threatens jobs in areas where hauliers are large employers.

[Peter Grant]

The hon. Lady is absolutely correct. Of course, if hauliers manage to pass those price rises on to supermarkets, the supermarkets get together and pass them on to the customers, which adds even further to inflation. The general answer to that point is that the United Kingdom’s food-distribution system is broken beyond repair. This is not the debate in which to discuss that, but the last few years have made it clear that that system is not fit for purpose and needs to be changed radically and quickly.

The Government’s response to the petition contains all the usual platitudes, and I look forward to the Minister repeating them when she gets to her feet. The response points out that the Government do not

“set the prices paid at the pump… The degree to which petrol pump prices respond to changes in crude oil prices is a commercial matter.”

Why? Is it not time that the Government started regulating the price of fuel at the pump, even temporarily, in the same way that they regulate—not all that effectively—domestic electricity and gas prices? If we know that somebody, somewhere is profiteering, is it not time for a regulator that can insist on the kind of open-book approach that the hon. Member for Ellesmere Port and Neston mentioned, so that we can identify where the profits have been made, and what parts of the supply chain are struggling? The few remaining independent fuel-station operators in the UK are seriously struggling. I do not think they are the ones that are profiteering, but somebody quite certainly is.

The Government’s excuse on the rate of VAT is extraordinary. Their response states that exceptions to the standard rate are possible, but

“these have always been limited by both legal and fiscal considerations.”

What legal considerations are those? The Government might have tried to use the excuse of “the Europeans won’t let us do it”, but as the hon. Member for Gower (Tonia Antoniazzi) pointed out, the Europeans seem to let everyone else do that, and it was just Britain that could not find a way of doing so within the limits of European law. We are not in the European Union any more. What has happened to taking back control? It is not Europe’s fault now—it never was—and the Government can no longer pretend that it is. They cannot pretend that it is anybody’s fault other than their own.

The Government also point out that there are “fiscal considerations”. We know that, but where were those fiscal considerations when the Government decided to spend massive amounts of public money on a scheme to deport people to Rwanda? To date, that scheme has not deported a single person—thank God. The Government cannot even tell us when—if ever—that scheme will have its desired impact of disrupting the business of people trafficking across the channel. When things will get the Government a headline on the front page of the Daily Mail, they can find the money, and “fiscal considerations” are suddenly not that important.

In January 2020, before the start of the pandemic, the average UK price for a litre of unleaded petrol was slightly more than £1.27 per litre, and the Government took 79.1p of that in tax. In April 2022—after the Government’s very generous new fuel duty price—the typical price was up to 161.7p per litre, and the Government’s tax take was 79.9p. Despite all the crowing about cutting fuel duty, the Government are taking more tax from the customer than before. As my hon. Friend the Member for North Ayrshire and Arran (Patricia Gibson) pointed out, a significant part of the tax on fuel is VAT, which is a percentage of the net cost plus 20% of the duty added back on again.

Prices have now got so bad that energy firms are warning that 40% of their customers could plunge into fuel poverty before the end of the year. This is in the week the Chancellor tweeted that it was nice to see the economy still growing—in that tweet he copied numbers that told us the economy was shrinking. That was in National Numeracy Week, which I thought was quite appropriate. The Tories response to the general cost of living crisis seems to vary from, “Get a second job,” to, “Learn how to cook.” How utterly offensive that is to my constituents—to all our constituents.

It never takes the Government long to come up with a scheme that they think will get the headlines they want in the newspapers they want. If the political will was there, they would have already come up with a scheme. Whether that was a duty or a VAT regulator on a sliding scale, so that it reduced as the underlying price increased, they would have found ways to either permanently or temporarily reduce the tax burden on the fuel at the pump. They would have started making noises about regulating the price of fuel in the same way that they regulate the price of domestic electricity and gas. I bet if the Government started seriously to talk about regulating the price of fuel at the pump, the industry would sort itself out pretty quickly. The one thing that the big oil companies do not want is the public being allowed to see just how much of a profit they make at the expense of our hard-pressed constituents. They are allowed to make those excessive profits with the consent, and possibly even the connivance, of a Government that simply do not care.