Fuel Prices

John McDonnell Excerpts

Thursday 13th September 2012 Commons Chamber

[Mr MacNeil]

The hon. Gentleman makes a great point, and a serious one, about rural places in mainland Scotland. Places such as Argyll, Caithness, Sutherland and Lochaber, which I must not forget as I worked there, would benefit from the extension and increase of the derogation.

It is interesting that, as the motion states, other countries, from the United States of America to Austria and Germany, are regulating. Ultimately, we will have to do the same in the United Kingdom before the economy is totally strangled. Whether it is the fault of the companies, the distributors, the speculators or the retailers, we need to get the issue sorted for the good of the economy. Indeed, retailers would be quite pleased to have greater regulation or transparency, especially as they are sometimes tied to long-term contracts with distributors, which makes it difficult for them to shop around and means that the price of fuel cannot be brought down in marginal areas.

Transparency might be the answer, but we must bear it in mind that in some areas and markets prices can go up if the seller is reluctant to give discounts to certain buyers. For that reason, regulation must be taken seriously before the economy is strangled. We cannot leave the foot pressing harder and harder on the jugular in the neck of the economy.

[John McDonnell (Hayes and Harlington) (Lab)]

I apologise for intervening and then leaving, but I am going to meet a group of people with disabilities. This is not just about fuel in the tank but about meeting people’s heating costs. The heating costs of someone who is elderly or has disabilities are always higher. Now, yet again, many people are having to choose between heating and eating. That is why we need to control these prices.

[Mr MacNeil]

My constituency has the highest rate of fuel poverty in the UK, so I know that the hon. Gentleman is absolutely correct, and I am grateful for his intervention. People are having to make these choices when they get up on a winter’s day, especially the elderly and vulnerable.

This is a poll tax on jobs and on economic activity. The TaxPayers Alliance has produced work that shows that in many places, of £30 paid at the till, £18 goes in tax. That is in line with my own research. In the case of a litre costing £1.50, 58p is tax and 28p is VAT. A total of 83p was paid in tax, but it will be more, and my constituency has the highest tax per litre in the UK.

We must look at what is happening in the supply chain when fuel goes from the refinery to the distributors and then leaves the depot and arrives at the retail forecourts. The best estimate that I can work out from rumours is that in my area, having left the depots, it is going to retailers at about £1.20 or £1.25 per litre excluding VAT. With VAT, it comes to about £1.50, and the rest is the retailer’s margin, which is usually 5p, 6p or 7p. My figures are approximate but they give an idea of what is going on. I can best ascertain that the pre-tax cost of a litre is about 65p.

The Government have promised to bring in a fuel duty stabiliser, and I encourage them to do so. That is what the Scottish National party called it; they could call it a fair fuel regulator, or whatever. That would control spikes in fuel prices, alleviating uncertainty and helping businesses to plan in an uncertain world.

High fuel prices hit the poorest most, and they hit jobs and families. They hit rural constituencies and island constituencies. We cannot constantly come back to this Chamber with the same complaints year after year, Government after Government. I could not tell the House how many speeches I have made about this, but there have been many over the past seven years. There has been some progress in recent years with the rural fuel derogation, and I am thankful for that, but more has to be done. It is the job of Parliament and of Government to solve the country’s problems. We need regulation and we need to bring in the fair fuel stabiliser for the hard-pressed motorists, workers and families of this country.