Fuel Duty

Robert Halfon Excerpts

Monday 12th November 2012 Commons Chamber

[Cathy Jamieson]

No. I have given way already and I want to make some progress. It is important that people hear why we are proposing the motion tonight.

Almost 20% of FSB members identified fuel costs as a barrier to growth. Not only those organisations but—[Interruption.] Hon. Members on the Government Benches—those who tend to think they are the champions of industry—might want to listen to the voice of industry. The Petrol Retailers Association has reminded us of the impact of VAT and the impact on the price of fuel if the 3p per litre increase goes ahead in January.

Those are the voices of industry, but it is not just industry that will be affected:

“We must remember that motorists are not a lobby group. They are mums driving to school, children on buses and pensioners hit by inflation. When the cost of road haulage rises, the price of everything else rises too.”—[Official Report, 23 May 2012; Vol. 545, c. 140WH.]

Credit where it is due—those are not my words; they are the words of the hon. Member for Harlow (Robert Halfon) in a Westminster Hall debate in May 2012.

[Robert Halfon (Harlow) (Con)]

I am hugely grateful to the hon. Lady for giving way, but my constituents in Harlow will have much more trust in the Chancellor, who cut fuel duty last year, which the Opposition opposed, and provided two fuel duty freezes, than in the political opportunism that the hon. Lady is proposing today.

[Cathy Jamieson]

I am genuinely sorry that the hon. Gentleman adopts that tone because I know that he has worked determinedly to raise the issue. I am sure that his constituents will want to know exactly what the Chancellor is going to do. Our shadow Chancellor has said what he thinks, whereas the Chancellor seems to be debating by a nod and a wink, and nothing is determined.

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[Robert Halfon (Harlow) (Con)]

I believe that, as has been said, fuel duty has become a toxic tax, and that the public have just had enough. I also believe that the Government are listening, and that that is shown by their amendment, as highlighted by my right hon. Friend the Member for Wokingham (Mr Redwood). I am disappointed with Labour’s smokescreen. This debate is really about hiding the record of the shadow Chancellor and many years of putting up fuel duty. I have to say to the hon. Member for Kilmarnock and Loudoun (Cathy Jamieson) that when I was campaigning hard last year, organising and working hard with FairFuelUK to get the Government to cut fuel duty, the Government cut fuel duty in the 2011 Budget but the hon. Lady, the shadow Chancellor and their party voted to keep fuel duty up, so let us have no discussion about who is being opportunistic. I am disappointed that the Labour party has chosen to conduct the debate in this way.

The heart of the debate should be the figures published by the Office for National Statistics almost a year ago. Its data proved that fuel duty is regressive and hits poorest Brits the hardest. It is with that fact in mind that we should consider the recent history, or at least the past five years, of the debate in the House on petrol taxes. In 2007, the shadow Chancellor said:

“In this Budget, we have set out further actions to advance the environment agenda, including…a fuel duty increase of more than inflation”,

and that that

“demonstrates the Government’s commitment to tackling climate change”.—[Official Report, 26 March 2007; Vol. 458, c. 1265.]

I think that that sums up the shadow Chancellor’s principles on the issue. I have to say that he makes the Vicar of Bray look like Gandhi. In reality, the shadow Chancellor’s petrol tax had very little to do with climate change, because families could not change their behaviour to respond to it. Like scrapping the 10p rate, it was a tax on the poor.

That is why I am sceptical when the Opposition motion makes much of the small delays that Labour has sometimes applied to its increases in fuel duty. If one looks at the substance of the Budgets of 2009 and 2010, one sees that it programmed in massive fuel hikes for 2010, 2011, 2012 and 2013. That is what we are dealing with today, and why I have campaigned, with many of my colleagues, to cut the cost of fuel duty. The argument is therefore not about whether we believe that the fuel duty rise should not go ahead—I passionately believe that—but about tactics. It is sensible and right to wait for the autumn statement. Given the Government’s record—they cut fuel duty last year and have stopped two planned fuel duty rises—I believe it is right to wait for the autumn statement.

[Albert Owen]

The hon. Gentleman has been consistent on this issue. He has also been campaigning hard for transparency on fuel duty matters. On that theme, will he tell the House what discussions he has had with the Chancellor? Which report in the newspapers is right: that the 3p rise will not go ahead and there will be a cut, or that there will be a 2p increase in the autumn statement?

[Robert Halfon]

Unfortunately, I am just a brand-new MP and I do not have the luxury of having discussions with the Chancellor. I have no idea what is in his lunchbox, but I do know that the Government have a record of cutting fuel duty. That is something that I am proud of and to which I can give strong support.

[Dr Julian Lewis (New Forest East) (Con)]

Will my hon. Friend accept the assurance, as least from Government Members, that if the rise does not go ahead it will have far more to do with his campaign than anything the Opposition have done?

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[Robert Halfon]

I am hugely grateful to my hon. Friend and, I have to say, to many colleagues in this House, some of whom are on the Opposition Benches. My hon. Friend the Member for Cleethorpes (Martin Vickers) has done a huge amount of work behind the scenes, as have many other colleagues. We will have to wait and see what the Government say in the autumn statement, but I am happy to support them because I believe that they are in serious listening mode.

I have three concerns about the Labour motion. First, it is a non-binding motion; it is just gesture politics. My constituents care about the price of petrol, not the politics. Secondly, the only way that we can stop the petrol tax is through the autumn statement on 5 December. That is how it has been done in the past few years. Yes, I am asking the Treasury for action on fuel, but what my constituents want is action on the policy—the substance. My constituents will not be looking at what happens today; they will be looking when the Chancellor makes his speech on 5 December. That is when we hope the Chancellor will listen to British motorists.

Thirdly, we need a long-term settlement for cheaper petrol. My right hon. Friend the Member for Wokingham is exactly right. The motion proposes a three-month oil rush, which would lead to motorists being hammered with a 7p tax rise in April 2013. The only way to get the long-term settlement is to work constructively with the Government and look at reform and how we can permanently lower fuel duty.

[David Simpson (Upper Bann) (DUP)]

Will the hon. Gentleman give way?

[Robert Halfon]

I may if I have time, but I will continue for the moment.

I believe that the Government are in strong listening mode, and I would not go into their Lobby tonight if I did not believe that to be the case. If we look at the Treasury amendment carefully, we see that it does not rule out stopping the planned rise in January. That is a significant move from a few months ago, when the Government said that the rise would go ahead. As I said, the Treasury team have done more to cut fuel prices than Labour did in a decade. We do not have to work at Bletchley Park to read the signals the Treasury is sending about helping with the cost of living—it is written in black and white.

I will continue to ask the Government to lower fuel duty, but I want to end where I started: this is a matter of social justice. I have stuck my head above the parapet and tabled several motions urging the Government to cut fuel duty. Inevitably, the focus in the media today has been on the economics, but this is about social justice. The average person in Harlow spends £1,700 a year filling up the family car—one tenth of their income. In essence, those families are facing fuel poverty. According to data published last year, three quarters of bankruptcies in the transport sector were the result of fuel costs. High fuel prices are adding to Britain’s dole queues. Furthermore, as the AA shows, families are choosing between buying food and filling up at the pumps.

I urge the Chancellor and the Treasury to listen to the thousands of Harlow residents who have written to me, and take action. Given everything the Treasury team have done in the past two years to cut fuel duty and given that the Chancellor’s amendment leaves the door open to cuts in fuel duty, we should at least wait for the autumn statement before casting judgment. That is why I will be proud to vote with the Government tonight, and I urge the House to vote for the amendment. I would not support the Government if I did not believe they had genuinely taken this on board. I hope they do not let us down.

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

I am disappointed that we have been forced to call this debate this evening. It shows just how out of touch with the public this Government are that they have yet to postpone January’s 3p increase in fuel tax. Dropping hints about the autumn statement is just not good enough at this stage.

I am sure that the high volume of correspondence I have received on fuel prices is replicated among Members across the Chamber, as fuel prices are now cutting into the quality of life of each of our constituents. In particular, I have been hearing from those who live in the rural and farming areas of my constituency. Rural sparsity, combined with the ongoing decline in rural bus services and a loss of local services, means that a car is a necessity in many rural areas, not a luxury. The Scottish Labour party has been calling for the re-regulation of bus services, as the Scottish Government’s policies have resulted in essential routes being unsubsidised and in many cases scrapped. Although voluntary projects such as the “Getting Better Together” project, in Shotts, and our regional transport partnership, Strathclyde Partnership for Transport, are working hard to fill the gaps, it will take direct action from the Government—to start with, by regulating our bus services—to fix this problem across the board.

The point is that the public transport infrastructure at this point is not at a level that could possibly allow the majority of people in rural communities to give up their cars without risking their quality of life and becoming increasingly isolated. The situation is becoming impossible for those who are having to decide to give up their cars, when there are little, if any, alternative forms of transport where they live. Every rise in fuel costs places a disproportionate burden on our rural communities, and now they feel that enough is enough.

It makes no sense to the Opposition that the Government, who postponed the fuel tax rise in August, seem to be ploughing ahead with this rise. Although we are cautiously coming out of a double-dip recession, most people have yet to feel this in their pockets. They are not yet seeing the difference in their bank statements at the end of the month. Incomes are still frozen, and the cost of essential bills continues to rocket. Those living in our towns are not escaping the assault on their standard of living, either. Increasingly, many have had to make difficult choices every day about using their car or paying other important bills.

Chapelhall, where I live, is home to many commuters. Commuters live where they can access more affordable housing, and homes are cheaper the further away they are from public transport links. Commuters also have to travel further to find jobs, as the employment market has yet to recover fully. This means that millions of commuters across the UK depend entirely on their cars to access work. Rocketing fuel costs are making work pay less.

I am particularly concerned about those of my constituents living with a disability that makes it difficult to travel. Labour introduced Motability way back in the 1970s to ensure that those living with a disability who require a car in order to travel can afford it. However, the costs are mounting for those running a car on Motability, and I have yet to hear the Government announce an increase in disability living allowance alongside the planned increase in fuel tax in order to plug the gaps caused by these additional costs. Some of the most vulnerable in our society will have to limit their car use, to the extent that it will jeopardise their chances of having a decent quality of life.

[Robert Halfon]

I am grateful to the hon. Lady for giving way, and for her speech. Given what she has just said, does she not recognise that the Government increased benefits by 5% and still froze fuel duty this year?

[Pamela Nash]

I thank the hon. Gentleman for his intervention, but the Government have taken other measures such as increasing VAT and cutting other benefits, which have had an adverse effect on the people I am speaking about. The fact that the Office of Fair Trading is conducting an inquiry into fuel prices reflects the public’s deep concern about the cost of fuel.

In press reports today, Government Back Benchers referred repeatedly to this debate as the cost of living debate; I have not heard it called the fuel duty debate at all. In his opening speech, the Minister seemed to talk about everything but fuel duty. It seems that Government Members want to talk about anything other than fuel tonight, because they know that the country is not on their side. I expected more Tory Back Benchers to be in the Chamber this evening trying to explain to their constituents why they are voting against our motion on fuel duty. I suspect that many of them are watching ITV to see their colleague in the “bug burial” in the jungle.

It is clear to Opposition Members, and to the thousands of constituents who have written to us about fuel duty in recent weeks and months, that the Government will be out of touch with the people of this country, who have been drastically affected by the increased cost of living, if they do not announce this evening the postponement of January’s fuel tax increase.

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[Catherine McKinnell (Newcastle upon Tyne North) (Lab)]

It is an honour to follow the hon. Member for Witham (Priti Patel) and her characteristically warm-hearted contribution to the debate.

This has been an important and much-needed debate. Members on both sides of the House have shown the strength of feeling that is out there on our roads against the extra burden that this fuel duty rise would place on families and businesses, at a time when prices are still rising faster than wages. Households that are already suffering from the Government’s failed economic policies cannot afford to be hit by an extra 3p per litre, especially with fuel duty already 15p more per litre than it was at the general election.

My hon. Friend the Member for Ynys Môn (Albert Owen) well summed up as hypothetical nonsense Conservative Members’ attempts to distract from their failure to support the motion by suggesting that were Labour in government the fuel duty might be 10p per litre more. Labour Members have been calling for a temporary VAT cut to take 3p per litre off the price of fuel immediately, but with the Government refusing to act, we are now calling on Members to support the motion to delay this extra tax that will hit families and businesses, slowing growth even further.

A clampdown on tax avoidance by employment agencies and umbrella companies would raise more than enough money to delay this rise until April. It would also bring an end to the exploitation of workers under those schemes, who are often left worse off as agencies pocket the extra profit from avoiding tax, leaving employees at risk of being pursued for that tax in later years.

There have been many excellent contributions to this debate, as well as some not so excellent. Many Members, especially those from rural communities, have raised concerns about the impact that the increase in fuel duty will have on them, and I mention in particular my hon. Friends the Members for Inverclyde (Mr McKenzie) and for Airdrie and Shotts (Pamela Nash). The hon. Member for Waveney (Peter Aldous) made a well-considered and reasonable contribution to the debate, but unfortunately failed to explain why he will not support the motion tonight. The hon. Member for Harlow (Robert Halfon) has long campaigned on this issue. He concluded his characteristically well-considered speech by saying that he is proud to support the Government tonight as the Chancellor is in “serious listening mode”, but that he hopes they will not let us down. Well, many of our constituents are sitting at home tonight, hoping that the Government will not let them down. Our economy has just emerged from a double-dip recession—a recession, I must add, that was made in Downing street. That emergence is welcome but there is no room for complacency. Our recovery is still fragile and people are feeling the struggle.

In government, Labour either cut, froze or delayed planned fuel duty rises 13 times because we thought it was appropriate, and did so twice following the financial crisis because we recognised that in a fragile economic environment, a postponement would provide practical help to ordinary people and businesses feeling the squeeze. The Government claim that they are in strong “listening mode”—Members on the Government Benches certainly seem to have been given that reassurance.

[Robert Halfon]

I am grateful to the hon. Lady for her gracious remarks, but why did she and her colleagues vote against the Government when they cut fuel duty last year?

[Catherine McKinnell]

How will Government Members explain to their constituents why they have not voted for a freeze in fuel duty tonight, when the overwhelming consensus is that that is much needed by families and businesses up and down the country?

Let us hope the Chancellor is listening to the debate. The price of a litre of petrol is now £1.36, 5p more than when the Chancellor agreed to defer the duty increase in August and 15p more than at the general election. The tax on a tank of petrol in 2010 was £37.60, but it has now risen to £40.30. If we do not delay the 3p increase tonight—if hon. Members do not vote to freeze it—it will go up again in January to £42.20. A family could spend £200 a year more on fuel tax in 2013 than they spent in 2010. Families cannot afford that £200. The increase in VAT has cost a family with children £450 each year, pensioners are facing extra burdens after the granny tax, cuts in child tax credits will cost some families up to £545 a year, and cuts to working tax credits mean that those on low incomes will lose up to £3,870 a year if they cannot increase their hours at work. That is the impact of this Government’s polices on family budgets.

Small businesses, too, are struggling. The Government’s flagship project Merlin agreement with the banks has flopped and failed, and much-needed cash is simply not getting through to help businesses to expand and create jobs. Businesses need a break, and a freeze in fuel duty would provide it. That is why the Opposition have tabled the motion. We want to give the Government and Government Back Benchers the chance to join us and vote in favour of easing the burden for people up and down the country who will be hit by the fuel duty increase.

It is clear how the Opposition proposal could be paid for. The Government need to take urgent action to crack down on tax avoidance schemes by employment agencies and umbrella companies that classify part of their employees’ pay as a reimbursement for travel and subsistence expenses and claim back the tax relief. In most cases, employees do not see even a fraction of the extra profits that companies make as a result. In some cases, workers are not even aware that their pay is being manipulated in that way, but if they end up with too few national insurance contributions, they lose out. They could even be liable to repay the tax and national insurance and end up personally out of pocket if Her Majesty’s Revenue and Customs successfully challenges the scheme. HMRC’s figures forecast that the tax loss from such schemes in 2012-13 will be £650 million, but more recent estimates put the figure at more like £1 billion, as more companies jump on the bandwagon. Even a conservative estimate of what could be raised from clamping down on that one area of tax avoidance would more than cover the £350 million needed to pay for the fuel duty delay.

The Opposition understand that the rules exist, but enforcement has been lacking. The Government’s cuts to HMRC—an additional 10,000 jobs are set to be lost by 2015, and £2.1 billion has been taken out of its budget—have made the job even harder. It is essential that we take action. Companies that play fair and pay their tax properly and transparently are disadvantaged by those that cheat the system. The tax that should be paid and is avoided, or in some cases illegally evaded, is sorely needed to support our struggling economy.

The Government have lots of tough talk on tax avoidance but very little action. The Opposition motion calls on the Government to get a grip and clamp down on tax avoidance and to use the money where it is needed. Government Members know that that is what their constituents want and need. Nods and winks from the Chancellor will not fill their petrol tanks. Without a proper commitment from him, Members should support the motion tonight. If MPs unite today and vote for the motion, the Prime Minister and the Chancellor will have no choice but to see sense and give that reassurance to families, motorists and businesses that we are on their side.