Owen Smith
Main Page: Owen Smith (Labour - Pontypridd)Department Debates - View all Owen Smith's debates with the HM Treasury
(12 years, 9 months ago)
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Owen Smith (Pontypridd) (Lab)
This has been a very important debate. It has also been timely, because VAT on fuel and high fuel prices are just two of the essential costs that are currently squeezing family living standards throughout Britain and strangling business confidence. It is also timely as today’s inflation figures reveal that inflation is still at 5%, which is more than double the Government’s now-forlorn target. This country has higher inflation than any country in the eurozone apart from Estonia.
The debate is timely, too, because, as my hon. Friend the Member for Scunthorpe (Nic Dakin) just said, the unemployment figures will be published tomorrow. We all hope that we will not see the dole queue growing on a Tory watch, as it so often has done in the past. Most importantly, it is a timely debate because the Chancellor has a brief window of time in which to change his mind and take action before he appears at the Dispatch Box in 14 days. He has a chance to do something, and the need to do something has been the theme of this debate.
Almost 20 Government Back Benchers representing constituencies across the country—from Wyre Forest, Argyll and Bute, Penrith and The Border, Cleethorpes, Burton, Congleton and High Peak among other places— have spoken in the debate. All of them pleaded with their Government to do something about high fuel prices in this country. I congratulate the hon. Member for Harlow (Robert Halfon) on securing this debate. He put the case most eloquently in an interview he gave on Radio 4 this morning, when he said that what he wanted from his Government were tax cuts for millions of hard-pressed people, not tax cuts for millionaires. We on the Opposition Benches entirely agree with that sentiment. The occupants of the “millionaires’ row” of the Government Front Bench may be less keen, however. [Interruption.] Yes, perhaps present company should be excepted, I confess. Normally, there are a few more millionaires on the front row. Tonight, they are a bit short. Perhaps they would like to come in.
Several hon. Members
Owen Smith
I am not going to give way on that point.
What all those Back Benchers have wanted is action. The crucial difference between what they have called for today and what has been called for by Opposition Members, including my hon. Friends the Members for Ynys Môn (Albert Owen), for Livingston (Graeme Morrice), for Dumfries and Galloway (Mr Brown) and for Stoke-on-Trent South (Robert Flello), the hon. Member for Dundee East (Stewart Hosie), my right hon. Friend the Member for Coatbridge, Chryston and Bellshill (Mr Clarke), and my hon. Friends the Members for East Kilbride, Strathaven and Lesmahagow (Mr McCann) and for West Lancashire (Rosie Cooper) and many others, is that we want something substantive done. For example, we want what we might have seen in the motion had it pursued the line of thought that the e-petition did. We want to see something tangible. What Opposition Members have called for is straightforward. We have said, “Cut VAT by 3p on a litre of petrol, reverse the tax increase that the Chancellor put on ordinary working people in the Budget and get the economy moving.”
Owen Smith
I will not give way because we do not have much time. [Hon. Members: “Go on.”] I will give way once.
Owen Smith
Interestingly, the Government tried to tell us that there was no prospect of our seeking a derogation in respect of VAT on petrol, but they are, in effect, seeking a derogation for their rural subsidy—or their rural special pilot. [Interruption.] We are not opposing it, but we are saying that they could go further than simply seeking a derogation for rural areas; they could cut 3p off VAT right across the country, not just on fuel, but on all things, and get the economy moving. That is what they could do. There is a reason for them to do it, and here they should have listened to the hon. Member for Romsey and Southampton North (Caroline Nokes). She gave a very interesting speech and it was interesting to hear a Conservative Member acknowledge, so many years after Conservatives have protested that it was not true, that VAT is a regressive tax. VAT hits the lowest-paid people the hardest, and VAT on fuel does exactly the same.
It is very instructive today that so many Conservative Members should have signed the motion, albeit this bowdlerised, Whip-friendly motion. It is evidence that Conservative Back Benchers, unlike those on their Front-Bench, are perhaps concerned about the living standards of ordinary people in this country. It is also evidence that they have spotted, at last, that they were sold a pig in a poke by their Chancellor at the Budget last year. What he said when he announced, with such great hubris, that he was putting fuel in the “tank” of the economy was that the Government were going to have a fair fuel stabiliser—this is the fair fuel stabiliser that he had been promising since 2008. Hon. Members may remember that this was a pledge to link the prices of unrefined petrol and refined petrol in order to smooth out volatility. Of course that is not what Conservative Back Benchers got at all. They have not got a mechanism that smoothes out volatility or that connects petrol prices to oil prices. They have not got what they all stood on as a manifesto pledge. This is yet another broken promise from this Government.
Owen Smith
I will not give way. What they have got instead is more smoke and mirrors from the Government. They have got what one commentator referred to as the Chancellor taking one policy and giving its name to another one. The casual observer would think that they had fulfilled their manifesto pledge, but in reality, of course, they have not done so.
Robert Halfon
I thank the hon. Gentleman for his kind remarks; I am glad to hear that he was listening to the “Today” programme. He talked about a vulgarised Whip motion, but that same motion was signed by 13 Labour MPs, including the hon. Member for Bolsover (Mr Skinner).
Owen Smith
I presume that the hon. Gentleman could confirm—I am not going to give way to him once more to give him a chance to do so—that he spoke to the Whips beforehand. I say that because the motion does not reflect what he wanted in his e-petition. What the motion rather coyly says is that the Government should
“consider the feasibility of a price stabilisation mechanism”,
thereby conceding that what the Chancellor said he was delivering is fiction. It is not a stabiliser; it is merely a gimmick, as we have come to expect from this Government. Why should anybody trust the Tories on fuel tax? Similarly, we should not trust them on VAT because they always say that they are not going to put VAT up and when they get in, they do.
At this point, I must give Government Members a bit of a history lesson, because we have heard such rot this afternoon about the Labour Government’s record on fuel tax. Between 1979 and 1997, during the last period of Tory government, the Tories increased fuel duty fivefold—not a five-point plan but a fivefold increase in fuel duty, which went up from 8p to 45p by the time they left office. During the ’90s, when they invented the fuel duty escalator, fuel duty increased from 59% to 75% of the price per litre. That is what we inherited when came to government. It was left to Labour effectively to stabilise prices by freezing successive—[Laughter.] Hon. Members may laugh but they really ought to read the facts before they come into the Chamber and speak. Let me quote from the House of Commons note that was prepared for this debate:
“Duty rates were cut or frozen for around six years from early 2000…By autumn 2008 duty was lower…in real terms”
than at any point since 1996.
The Economic Secretary to the Treasury (Miss Chloe Smith)
Will the hon. Gentleman give way?
Owen Smith
In a moment. What is the reality of what the Government did—[Hon. Members: “Stop pointing!”] I think she is worth pointing at. What is the reality of what the Government did in the Budget? It merely takes us back to where we were in 2008. Far from it being a substantive change, this is once again smoke and mirrors from the Government. They say there is nothing they can do but there is a choice—there is always a choice in politics.
Miss Smith
Did the hon. Gentleman vote against the Finance Bill measures? Did he vote for the fuel duty cut that we proposed?
Owen Smith
We have heard that utterly specious remark all the way through. We voted against the entire Budget, which we feel is choking off growth in this country. There is a choice the Government could take—they could choose to act. They should act today and implement a plan—plan A or plan B, we do not mind what it is called. They should just do something.
Miss Smith
I welcome that point from my hon. Friend and near neighbour. I should like to reassure her constituents, as well as motorists up and down the land, whether they are in rural, suburban or urban areas, that this Government have listened to their concerns and will continue to do so. However, today is not the day to try to change taxes—that is for the Budget. Today is to listen.
From our first Budget last year—indeed, from when we were in Opposition, when we said, as the hon. Member for Pontypridd has pointed out, that we would introduce a fair fuel stabiliser—this coalition Government have listened and acted. In the Budget in March, we announced a £2 billion package to support motorists at a time of record pump prices. However, the Labour party, including the hon. Gentleman, whom I do not believe was there at 4 am when many of the rest of us were, failed to support that package, which was supported by the Federation of Small Businesses on behalf of, for example, van drivers.
Before I come to specific points raised in the motion, I will explain why the Government took the action that they did in the Budget.
Owen Smith
Does the hon. Lady agree that the price stabiliser is not what it was described as being by the Chancellor and the Prime Minister when they were in opposition? It does not link pump prices to oil prices.
Miss Smith
It is the Labour party that wants a price stabiliser, and I shall come to that. Our fair fuel stabiliser aims to do other things, and I shall deal with that in due course.
Motoring is an essential part of everyday life for many households and businesses, and the cost of fuel affects us all. The Government recognise that the price of petrol is a significant part of day-to-day spending. We know that high oil prices are causing real difficulties with regard to the affordability of motoring. It is important that a responsible Government listen, consider and act.
It was the previous Government who, in the 2009 Budget, introduced a fuel duty escalator. That involved planning for seven fuel duty increases after the 12 that they had already made. None of those planned increases was subject to either oil price or pump price movements. Despite what Labour Members may claim now, and the synthetic anger referred to earlier in the debate, the previous Government had no plans whatever to support motorists. The right hon. Member for Coatbridge, Chryston and Bellshill (Mr Clarke) said, “We are where we are.” It is regrettable that the previous Government did not act to prevent us from being where we are. From the very beginning of this coalition Government, we have looked at how we could ease the burden on motorists. We acted with a £2 billion plan to ease that burden.
Miss Smith
No. I am sorry, but there is not time.
I need to explain to the hon. Lady that we deferred the inflation-only increase that was planned for April 2011 to January 2012, and deferred the 2012-13 increase to 1 August 2012.
Miss Smith
No, I will not. I need to press on.
There have been calls for the Government not to go ahead with those two duty increases. I can understand that, and my right hon. Friend the Chancellor understands that, but let us not forget that those increases remained in the Budget so that we can deal with the record deficit that we inherited. This is a time of international instability, and the difficult decisions that the Government have taken to tackle the deficit have made Britain safer for householders. Our reduction plan has led to low interest rates, which help householders through their mortgages.
Miss Smith
Thank you, Mr Deputy Speaker.
I need to explain that our fuel duty cut was on top of an increase in approved mileage allowance payments; that helps employees and volunteers who use their own cars. I think that, in the light of their speeches this afternoon, my hon. Friends the Members for Romsey and Southampton North (Caroline Nokes), and for High Peak (Andrew Bingham), will welcome that. That is all on top of the increase in the personal allowance, cuts in corporation tax, above-inflation increases in child tax credits, and the triple guarantee for pensioners. That is real help for motorists, businesses and families, as my hon. Friend the Member for Truro and Falmouth (Sarah Newton) said.
Let us not forget that although the Opposition have talked so much today about helping motorists, they could not even bring themselves to offer their support for the fuel duty cut, or the increase in the supplementary charge on oil and gas companies to fund it, in the Finance Bill debates.
Miss Smith
No; I am terribly sorry. Today, average pump prices are approximately 6p per litre lower than they would have been if we had continued with the previous Government’s planned escalator, which the Opposition are so keen to airbrush out of history. That means that a typical Ford Focus driver would have been £56 better off in 2011-12, and an average haulier £1,700 in 2011-12. [Interruption.] Opposition Members are chuntering and trying to suggest that motorists would be better off under their plans for an escalator and a VAT rate of 17.5%. We know that the right hon. Member for Edinburgh South West (Mr Darling) was planning to increase VAT.
The Opposition cannot say where £12 billion of extra expenditure would come from, and it is simply not true that motorists would at present be better off under the previous Government’s plans. When comparing the changes that we announced in the Budget with the previous Government’s fuel duty and VAT plans, pump prices are approximately 3p a litre lower. By the end of the Parliament, average pump prices will be 3.5p a litre lower. Cutting fuel duty and scrapping their escalator will more than offset the impact of the increase in VAT.
I shall quickly address the issue of whether oil price falls this summer have been passed on at the pump, which is a matter of concern to hon. Members who have participated in the debate and to many of our constituents. For motorists to realise the benefits, as we all wish them to do, retailers need to pass those on at the forecourt. Individual pricing decisions are for retailers—we have heard about competition from my hon. Friend the Member for Worcester (Mr Walker) and others—and the Office for Fair Trading is not aware of any evidence that would allow it to launch an investigation.
The Chancellor has made it clear that although the Government can control the duty rate it cannot control the world oil price. After such a good debate, I hope that I speak for Members from all parts of the House in saying that we all want motorists to benefit as much as possible from falls in oil prices. A number of complexities mean that pricing is not the same at every petrol station in every part of the country, but overall prices today are lower than they were at the beginning of the summer, just as they were lower at 6 pm on Budget day after we cut prices by 1p. They are 6p a litre lower because of the actions taken by this Government.
Furthermore, I regret to say that the motion is wrong about fuel duty receipts, which have not fallen by £1 billion since 2008. Official receipt data show that receipts have increased in recent years. Let me deal briefly with the fair fuel stabiliser. The support we are providing to the motorist needs to be paid for. My hon. Friend the Member for Beverley and Holderness (Mr Stuart) referred to sound Conservative principles, and this is one of which I am proud—things must be paid for—and it is fair that companies make a higher contribution. Only in that way can we support the motorist in a way that is fair, affordable and transparent. Updates on the introduction of a rural fuel duty rebate will be available to hon. Members who are interested in that, and we must do what we need to do in a sustainable manner.