General Matters

Debate between Martin Vickers and Robert Halfon

Tuesday 17th July 2012 Commons Chamber

[Robert Halfon (Harlow) (Con)]

I want to make just one point about the transparency of petrol and diesel prices.

The Government have stepped up to the plate in cutting fuel duty. Ministers have done more to cut fuel duty in two years than many Governments have managed. However, fuel duty is still a stealth tax. As the FairFuelUK campaign has pointed out, we are not straight with the public about how much tax they pay. I pay tribute to FairFuelUK, which is one of the most effective campaigning groups in our country.

When I fill up my car, my receipt says, “Fuel: £50. VAT: £10.” That is wrong. If it was accurate, my receipt would say something like, “Fuel: £25. Duty: £25. VAT: £10.” There should be some mention of how much of that tax is spent on our roads. I want to make three brief points. First, I will explain that it was never meant to be like this. Secondly, I will say what I am proposing. Thirdly, I will say why transparency works.

The history of car taxation is a textbook case of how a tax becomes entrenched. First, it is temporary and is hypothecated for a specific purpose. It is then expanded. Finally, it is folded out into general taxation. That is exactly what happened to fuel duty between 1909 and 1937. In the early 20th century, funding for roads was drawn mainly from local ratepayers. The so-called people’s Budget in 1909, which came from the Liberal party, put a new duty on motor spirit, or petrol, in the days before our European Economic Community membership forced us to introduce VAT. The duty was ring-fenced for a road improvement fund. The explicit promise of Lloyd George in his Budget speech on 29 April 1909 was

“that the funds so raised will not merely be devoted exclusively to the improvement of the roads, but that they will be well and wisely spent for that end.”—[Official Report, 29 April 1909; Vol. 4, c. 497.]

By the 1920s, the road fund was repeatedly raided to prop up the Treasury. At the same time, fuel duty was compounded by licence fees, vehicle taxes and so forth. Eventually, from 1937 motoring duty was treated as general taxation. By 1966, just 33% of the revenue was spent on roads, and by 2008, the proportion was just 20%. Over the years, a series of “temporary” increases have been brought in. The fuel duty escalator began, in a sense, with the Hydrocarbon Oil Duties (Temporary Increase) Act 1956, back when duty was fluctuating between 5p and 6p a litre, and VAT did not exist. The temporary increase was a mirage. Fuel duty is now 58p a litre, with 20% VAT on top—an increase of more than 1,000%.

I argue that the tax burden should be clear and transparent on every receipt and every fuel bill. There should be also be some indication of how much is being spent on our roads. My receipt would therefore say, “Fuel: £25. Duty: £25. VAT: £10. Amount spent on roads: £7.” My hon. Friend the Member for Ipswich (Ben Gummer) made such a proposal for income tax, which the Chancellor welcomed. Let us do the same for petrol and diesel.

Why is that necessary? First, because we should be honest with motorists. The average family in Harlow spend a tenth of their income on fuel, which is more than they spend on the weekly shop. In essence, they face fuel poverty and they have a moral right to know why their bills are so high. Tax transparency would also act as a deterrent to any Government hiking fuel duty without good reason, because people would see the increase on their receipts.

[Martin Vickers (Cleethorpes) (Con)]

As always, my hon. Friend makes a compelling case on this issue. Does he agree that it is important not only that the ordinary motorist knows that information, but that the road haulage industry knows it? It has been crippled by heavy taxes.

[Robert Halfon]

My hon. Friend is exactly right, and I know that when he goes back to Cleethorpes, his constituents will thank him in the streets for the work that he has done with me to try to cut fuel duty.

Tax transparency would also make it easier to hold the big oil companies to account. The Government say that their actions have a low impact compared with the huge swings in the oil price, and my proposal would give people hard evidence on a weekly basis of whether falls in the price of oil were being passed on to consumers. as recommended by the website with which I am involved, www.petrolpromise.com.

My proposal does what it says on the tin. We need basic transparency about how much fuel duty people pay and where the money goes. That would be more honest, it would be a deterrent against tax rises and it would put pressure on the oil companies to be fair. I hope, if the House is willing, to introduce a private Member’s Bill on the subject later this year. In the meantime, I urge the Deputy Leader of the House to consider the proposal for the autumn statement.

Petrol and Diesel

Debate between Martin Vickers and Robert Halfon

Wednesday 23rd May 2012 Westminster Hall

[Martin Vickers (Cleethorpes) (Con)]

As always, my hon. Friend makes a powerful case. The point about the price differential from area to area is particularly important in my constituency, where Immingham is a major centre for the haulage industry. Increased haulage prices trickle down into the economy generally. Does he agree that it is particularly important that any investigation take note of the impact on haulage businesses?

[Robert Halfon]

My hon. Friend is completely right. Before I answer that, I should say that although I have received a lot of credit for working on the fuel campaign in Parliament, he is deputy chair of FairFuelUK and has done an enormous amount of work to help me behind the scenes. I must give credit where it is due. Haulage firms all over the country are closing down. Transport firms are closing.