Fuel Prices

Debate between Owen Smith and Robert Halfon

Tuesday 15th November 2011 Commons Chamber

[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.

[Robert Halfon]

Will the hon. Gentleman give way?

[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.

--- Later in debate ---

[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.