Fuel Prices and the Cost of Living

Pamela Nash Excerpts

Wednesday 16th March 2011 Commons Chamber

[Gemma Doyle]

There should be regret that this Government have raised VAT to 20% with no regard for people in my constituency. Never before have people in West Dunbartonshire been forced to pay £1.36 for a litre of unleaded or £1.43 for diesel, as they do now at some local forecourts. Every time they make a trip to the filling station, they find that it costs them a bigger share of their income to fill up their car.

As we know, the recent spike in the price of fuel has been driven in part by rising world oil costs, especially as a consequence of the crisis in the middle east, but the Government have heaped unnecessary extra pain on people by hiking VAT to 20%, adding 3p to a litre of fuel. It is astonishing that the Government have acted so callously in driving up the cost of fuel, given the pre-election promises made by both the Conservatives and the Liberal Democrats last year. I am sure that I am not the only Member who saw leaflets promising action to keep fuel prices down circulated at the last election by one or both parties, although to the best of my knowledge, the Lib Dems did not even bother using their Royal Mail freepost in my constituency in the election last year.

That the price of fuel at the pumps is now at a record level as a consequence of the Government’s actions is an unforgivable betrayal, but that is of course something that we are getting used to from the Government. The attack on ordinary families’ standard of living goes much further than rising fuel prices driven by the actions of this Government. The VAT hike will cost families with children around £450 a year. Unfair cuts to tax credits, child benefit and housing benefit will further erode the incomes of families who rely on that support.

[Pamela Nash (Airdrie and Shotts) (Lab)]

Does my hon. Friend agree that the Government have failed to recognise the impact that the VAT rise on fuel will have even on products that are protected from VAT, such as food and children’s clothing?

[Gemma Doyle]

My hon. Friend makes a significant point. I was about to say that a number of factors are adding up to put intense pressure on family incomes. For example, 1,000 families in my constituency will lose a further £400 a year as a result of the Government’s cuts to the child care element of the working tax credit. What makes that all so much worse is that while the Government are choking off help for hard-working families and recklessly cutting jobs and services, they have given the banks a huge tax cut this year. I know my constituents find it hard to understand how that can be squared with the Prime Minister’s claim that we are all in it together—a frankly laughable claim from a Cabinet of millionaires. [Interruption.] I am sorry if Government Members do not like to be reminded of how many millionaires are in the Cabinet, but I am afraid that that is a matter of fact.

The Government have heaped pain on families, but they could have made a different choice and relieved some of that pain. As my hon. Friend the Member for Wallasey (Ms Eagle) said, the Government could use the £800 million raised from the bank levy immediately to reverse the VAT rise on fuel. Just as the previous Government often postponed fuel duty rises when oil prices were rising, as they are now, the Chancellor should look again at the Budget—that is why he should be here today, listening to the arguments—ahead of the planned 1% rise in April.

--- Later in debate ---

[Charlie Elphicke]

I gently encourage the hon. Lady to be cautious when making remarks about rich people. The other day her right hon. Friend the Leader of the Opposition talked about how his house is worth millions and millions, so we should be careful before we start trading such ludicrous insults. This is a serious debate; we have people in our constituencies living in deprivation, and all she can do is trade political barbs. I encourage her to consider how we can create more jobs and money, and how we can grow the private sector, so that it includes real jobs and real money that will take this country forward and grow our economy. The priority has to be to ensure that this country gets back into the fast lane of economic growth in the international arena. We have been slipping down the global competitiveness league over the past 10 years, and we need to ensure that this country goes back to the head of the economic river.

[Pamela Nash]

Does the hon. Gentleman not agree that rapidly rising fuel prices are doing exactly the opposite of what he says his Government are trying to achieve, with economic growth and the number of jobs throughout the country decreasing?

[Charlie Elphicke]

I cannot control the weather; God controls that. Nor can I control world oil prices; they are controlled by the global markets. Would that we could just magic away the fact that global oil prices have risen, but we cannot, and global oil prices have been rising and creating the problem felt deeply by many of our constituents. The situation has not been helped by the past decade’s 12 rises in fuel duty, which saw it go up from 36p to 57p. That is a massive, 20p increase, and on top of that there is VAT. But, to come to this House and say, “Well, why don’t we just chop the VAT by 2.5%,” knowing that is illegal and unlawful, and that it would take six years to secure such a derogation, is a shameless and craven exercise in opportunism.