Fuel Prices and the Cost of Living

Nicholas Dakin Excerpts

Wednesday 16th March 2011 Commons Chamber

[Nic Dakin (Scunthorpe) (Lab)]

It is a pleasure to follow the hon. Member for Devizes (Claire Perry), who spoke with her usual panache, confidence and strength of purpose—rather like the Economic Secretary to the Treasury did in setting out the agenda from the Government’s point of view, which she set out very well. I do not agree with that agenda at all, but at least she was here to set it out, unlike the Chief Secretary to the Treasury. Like my hon. Friends who have made this point, I wonder where he is. I am rather reminded of a children’s book that was very popular with my children and I wonder, where’s Wally?

[Mr Graham Stuart]

It is admirable that Labour Members should be so disciplined in following the line they have been given, but does the hon. Gentleman agree that those on the Front Bench should spend as much time crafting their message so as not to table a motion that is illegal, impractical and careless? They should pay more attention to that rather than just drilling their Members to keep asking where’s Wally, which perhaps sums up the state of their politics today.

[Nic Dakin]

I think I was the first person to ask that in this debate. Of course, we have a clear economic message that runs counter to the posturing successfully used by the parties in government to suggest that there is a need to cut fast and deeply. Our message is that there is no need for such cuts. Three tools are at our disposal to manage our way out of the economic challenge: growth, taxes and service reductions. The Government are using only taxes and service reductions, at a heinous rate, when we should have a policy for growth. Their policy is for the opposite of growth.

Let me draw attention to the headlines sought by the Conservative party as long ago as 2008: “Tories vow to slash fuel duty”, from the Press Association on 6 July 2008; and “Tory tax cut to beat hike in fuel” from The Sun on 7 July 2008. In a sense, since 2008 the Conservative party has made promises to the British people on fuel duties that it has singularly failed to meet in government.

[Lilian Greenwood (Nottingham South) (Lab)]

Does my hon. Friend recall a promise being made before the election to increase VAT to 20%?

[Nic Dakin]

I recall one of the parties in government saying to the other party that it was telling an untruth when it said that it would not put up VAT. It turns out that both parties were planning to put up VAT all the while.

People face real difficulties because of the situation in the middle east, the fuel duty rises that the Government have already imposed and the burden of putting VAT up, totally unacceptably, to an all-time high. That favourite Tory tax is now at 20% and that is causing real difficulties for people—we need to listen to them.

[Neil Carmichael (Stroud) (Con)]

May I clarify that it was the Labour Government who introduced most of the VAT increases, which needs to be discussed? Does the hon. Gentleman agree that it is wise for the Chancellor to be considering a fuel stabilisation change?

[Nic Dakin]

When there were huge economic challenges caused by the great global banking crisis, the Labour Government reduced VAT on fuel and on everything else—they did not put it up and worsen the situation, which is the policy of the parties on the Government Benches.

Let us look at the impact of this tax on growth on people and businesses. Alongside the tax on growth, we have cuts in public services, rising prices, inflation wobbling out of control, cuts to the education maintenance allowance—given to the poorest of our young people so that they can continue and aspire in education—and tuition fees being set at record levels. Unemployment among young people is, on this Prime Minister’s watch, the highest it has been for almost 30 years. That is the Government’s disgraceful economic record.

People on fixed incomes—including pensioners and those on disability living allowance—are hugely worried about the mobility effect of the hike in fuel prices and the difficulties it will make to their lives. Only today, a witness appeared before the Select Committee on Education—David Lawrence, the principal of Easton college in Norfolk—who said, “Higher fuel costs are a disincentive to participation.” That is what is happening in the real world.

Let me quote one letter that I have received this week, which illustrates the sort of correspondence that we all receive from our constituents. It reads:

“I am thirty eight years old, married with a family of six running two small cars to keep the cost down on tax and running costs. The biggest cost that we are finding hard to cover is fuel, since the beginning of last year, average petrol pump prices have risen from just under 111p/litre to almost 128p/litre. Diesel now costs more than 132p/litre, compared to 112.5p a year ago. I would like to explain to you what impact this is having on my ability to drive and go about my everyday life. The price of fuel not only affects work but personally the cost of running my car has significantly increased so that I only can afford to travel to work, any family trips to visit other areas of the region/country I simply just can not afford.

I am employed as a Transport Manager for a local business that relies heavily on local haulage transport companies and also sub-contractors that travel to our region making deliveries. To keep cost down along with trying to keep our CO₂ emissions down we use these sub-contractors as back hauliers as a reduced rate. Over the past few months we have seen transport companies we use either going to administration or just closing the business whilst they can pay back the creditors. This has a big impact on the business I work for as we can not be competitive in a tight margin industry we work in.”

That illustrates the difficulties caused in people’s private and working lives by fuel prices getting out of control and their impact on the economy.

In my area, as Government Members who represent Humberside constituencies know, we also have the spectre of the Humber bridge board threatening to put up the cost of Humber bridge tolls—an outrageous suggestion of yet another tax on local people and a tax on local businesses.

Let us look forward at what we can do. There are things we can do and messages about what we can look forward to. I agree with the hon. Member for Devizes that we should be careful not to engage in political posturing. We all, on both sides of the House, do that from time to time—I think she did a little bit, and I probably have, too—but there are practical things we can do. There is no need for the planned fuel duty increase. It should be postponed or stopped completely because of the circumstances that we are in. We can also consider what can be done about VAT. It did not need to go up on everything and there ought to be imagination and resolution in the EU to ensure that VAT is treated properly for people who drive vehicles in this country.

There are things we can do and it is time to do them. It is time to stop talking and time for action.

Royal Assent

[Mr Deputy Speaker (Mr Nigel Evans)]

I have to notify the House, in accordance with the Royal Assent Act 1967, that Her Majesty has signified her Royal Assent to the following Act:

Appropriation Act 2011.