Fuel Duty
Debate between Luke Evans and Greg Smith(2 days, 3 hours ago)
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Greg Smith
The hon. Gentleman is late to the debate—we have been around that a few times over the course of the afternoon. The record of the Conservatives in government was to freeze council tax and freeze fuel duty—indeed, we cut it when we saw Russia invade Ukraine in 2022. Conservatives stand on a proud record of keeping fuel duty down, freezing it and cutting it. It is his party that, in government, is going to increase it on hard-working people this very year.
Let us be absolutely clear: this is a tax rise, a regressive tax hitting the poorest the hardest; a deliberate, calculated and, frankly, cynical tax rise phased in carefully in the hope that people will not notice. We have a rise in September—a back to school tax. We have another in December—a Christmas shopping tax. And then, in March, we have a spring clean of people’s wallets. Three moments in the year, three hits to working people.
Dr Luke Evans
It would be remiss of me not to point out that in July the price cap will be reviewed. Does my hon. Friend agree that there is a decent chance, given what is happening in Iran, that we may well see an increase in energy bills anyway?
Greg Smith
My hon. Friend, as usual, makes a clinically accurate point, and he is absolutely right to do so.
The truth is that the headline figure does not even tell us the full story. This is not just a tax rise; it is a tax on a tax. Fuel duty is applied first and then VAT is charged on top of it. So when the Government increase fuel duty, they are also increasing the VAT paid on that tax—a tax on a tax. That means that what they present as a 5p rise is not really 5p in practice, but closer to 6p at the pump—a hidden double tax built into the system, taking more from every driver, every business and every household.
We saw that argument tested just this weekend. The Energy Secretary was asked directly about the soaring cost of fuel and his instinct was simply to point to global events, external pressures and anything other than the decisions being made here at home in Whitehall. But he was confronted by a simple, undeniable fact: a breakdown of the price of a litre of petrol showed that fuel duty alone accounts for around 38% of the cost and, once VAT is added on top, that more than half of what drivers pay at the pump is tax—more than half.
Let us be clear: this is not simply about international markets or events beyond our control. Of course global factors play a role and of course wholesale prices fluctuate, but when over half the price at the pump is made up of taxes set by this Government, Ministers cannot hide purely behind external circumstances. They cannot blame global markets and ignore their own policy choices. And they certainly cannot claim to be easing the cost of living while actively increasing the tax burden built into every litre of fuel. The consequences ripple through the entire economy. Equally, when prices go up, including at the hands of the Chancellor, crime also rises. Already we are seeing reports from our hauliers across the country of fuel thefts taking place. That is serious.
Fuel is not a luxury; it is fundamental to how the country works. It is how goods get to our supermarkets, how tradespeople get to jobs and how carers reach the most vulnerable. When the cost of fuel rises, the cost of everything else rises—shops feel it, businesses feel it, families feel it—and it is, of course, inflationary. That matters not just for household budgets, but for the public finances. Around a quarter of the United Kingdom’s national debt—some £750 billion—is index-linked, so higher inflation means higher debt interest costs. In other words, this policy risks making the Government’s own fiscal position worse even as it makes life harder for working people.
The question is: what are the Government going to do, and why are they doing this? Why impose higher costs on drivers, businesses and families at a time like this? The answer lies in a failure at the heart of this Government’s approach: they have lost control of welfare spending. Instead of taking the difficult decisions required to ensure that welfare spending is sustainable and properly targeted, they have allowed costs to rise and rise. Now, having failed to grip that challenge, they are asking working people to pick up the bill. We have already seen tax increases on jobs, family businesses, our high streets and our farmers; this is simply the next step. Drivers are being asked to pay the price for the Government’s failure.
There is a different approach. In government, the Conservatives understood the pressure that fuel costs place on households and businesses, which is why we cut—I repeat, cut—fuel duty, froze it year after year, and stepped in again when global pressures caused prices to spike. We recognise that Governments do not balance the books by making it more expensive for people to go to work or to set up or operate a business and do not hide tax rises within the price at the pump. No one can create a system where people are taxed twice—once through fuel duty and then again through VAT applied on top—and call that fair. This policy fails the basic tests; it is an unfair tax. We Conservatives will oppose this unfair tax rise, and any Member who cares about what our constituents are paying at the pump will surely vote for our motion tonight.
“Chapter 4A
Debate between Luke Evans and Greg Smith(1 year ago)
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Greg Smith (Mid Buckinghamshire) (Con)
After 21 sittings in the Public Bill Committee, the Government are still tabling hundreds of amendments to the Bill. That highlights once again that their false political deadline of 100 days in which to publish the Bill was foolhardy. They should have taken better time.
This is a bad Bill. Although it contains many good and well-intentioned measures, the Government have failed to get the balance right between employees and employers. Although I welcome some of the Minister’s comments—not least on bereavement leave for pregnancy loss, on which we spoke at length and agreed in Committee—I am afraid that the Government have got the balance wrong in the vast majority of the Bill. The amendments in the names of right hon. and hon. Friends in His Majesty’s loyal Opposition seek to highlight how the Bill simply goes too far in too many regards: it will affect our economy, it will affect the number of people who have a job, and it will affect the willingness of employers—the wealth and job creators—to take on new staff, to grow, to put new product lines in place and to keep employing people.
Dr Luke Evans (Hinckley and Bosworth) (Con)
I thank my hon. Friend for giving way and doff my cap to him for his 21 sittings in Committee. When the Regulatory Policy Committee considered the Bill, it said that eight of the 23 impact assessments were “not fit for purpose”. Is he any more confident that that has been rectified through the amendments?
Greg Smith
I am sorry to have to report to my hon. Friend that, no, I do not have greater confidence that the Bill will work. He is right that the RPC placed so much of the Bill in the red column—at severe risk—and identified it as “not fit for purpose”. Some of the amendments in my name and those of right hon. and hon. Friends, to which I will speak in more detail in a moment, seek to explore further the impact that the measures in the Bill will have on the economy, and to answer the point that he rightly outlined.
Fundamentally, we know that every Labour Government leave unemployment higher than when they started; the difference with this one is that they are actually legislating for that outcome.
I will turn first to new clause 83 and amendment 283. When we were in government, we banned exclusivity clauses in zero-hours contracts. We know that this flexibility works for many employees on zero-hours contracts, such as students and those with a summer job or other responsibilities—employees can value that. This Bill imposes a statist, top-down, “Government knows best” approach, which will limit flexibility for both employers and employees.
Greg Smith
My right hon. Friend makes a very good point in his stylish, witty manner.
As my hon. Friend the Member for Hinckley and Bosworth (Dr Evans) said, the Regulatory Policy Committee has given a red rating to the identification of options and choice of policy on zero-hours contracts and guaranteed hours in the Bill. That means the Government have not justified the necessity of clauses 1 to 6. What is the problem the Government are trying to solve with those clauses? Why are those clauses needed? We just do not know. The Bill, despite literally hundreds of Government amendments, remains silent about how these provisions will work in practice, which means the Government’s assessment that the administrative cost of the Bill to business in shift and workforce planning will be £320 million could well be an underestimate.
The deputy CEO of UKHospitality raised their concerns in Committee, saying:
“the Government are intending to leave it to case law and employment tribunal systems to figure out what ‘reasonable notice’ means.” ––[Official Report, Employment Rights Public Bill Committee, 26 November 2024; c. 43, Q39.]
That is an unacceptable way to legislate. Businesses crave certainty and a stable regulatory environment. This Bill provides anything but, and the result, as the chair of the CBI has said, is that it risks becoming
“an adventure playground for employment rights lawyers.”
Dr Luke Evans
My hon. Friend is a learned man and he may have seen the report in the Financial Times that, for the first time ever, the number of companies registered at Companies House has fallen. Does he think this Bill being on the horizon has anything to do with that, particularly given the points that have been made about it not being fit for purpose?
Greg Smith
My hon. Friend makes an exceptional point. The Bill categorically will be playing a part in that, along with the Budget of broken promises, the increase in employer NI and so on. I shudder to think what will happen when the Bill becomes law. We understand the parliamentary arithmetic—we understand that the Government will force this through, and that is the reason we have tabled new clause 83 and amendment 283.