Taxation Freedom Day Bill

Robert Halfon Excerpts

Friday 25th November 2011 Commons Chamber

[Mr Hollobone]

Indeed. Before the U-turn the burden of taxation on the British economy went down but then, as we know, it all started to go wrong, and from 1973 to 1975—three calendar years, in effect—those 21 days were reversed and taxation freedom day went back up to 2 June. One of the major reasons for that was the very high price inflation of that period. The Government of the day did not re-index all the taxation allowances and there was a huge fiscal drag effect, taking people into high rates of income tax.

Taxation freedom day did not change much until 1978. Between 1978 and 1982, it moved by 24 days, from 27 May to an all-time peak, 20 June, in 1982. In that period we had the rapid appreciation of sterling, particularly against the dollar, there was the doubling of VAT from 8% to 15% in Geoffrey Howe’s first Budget, a huge collapse in gross domestic product—not as sharp a fall as we are currently experiencing, but nevertheless a very dramatic slow-down in the economy—and another period of high inflation fuelled, in part, by a second big rise in oil and petrol prices. That meant that in 1982 the average British taxpayer had to work for 172 days, with all their income for those 172 days going, in effect, to Her Majesty’s Government.

There then followed quite a long period, from 1982 to 1996, just before the end of the Conservative Government, when taxation freedom day fell back by 25 days, from 20 June to 26 May. In 1997, when Tony Blair came in, taxation freedom day started to rise once again. Interestingly—I hope that this will convince the two Opposition Members present that I am trying to be as politically neutral as possible—taxation freedom day in 1997, when Labour took office, and in 2010, when Labour left office, fell on exactly the same day: 27 May. It rose in the middle of that period to 4 June, an increase of nine days, but in other years it fell by three days.

[Robert Halfon (Harlow) (Con)]

I congratulate my hon. Friend on his excellent Bill. Despite what he has just said, does taxation freedom day not generally fall earlier under long periods of Conservative government than under periods of Labour government?

[Mr Hollobone]

I am most grateful for that penetrating intervention from my hon. Friend, who serves his constituents with great enthusiasm and ability. Although I would like to think that there is an obvious correlation, my honest answer is that it might not be as strong as we would like it to be. That reflects the overall bad picture of all modern Governments settling a burden of taxation on the economy that is rather higher than he or I would like. Although brave attempts have been made to reduce that burden, particularly by Conservative Governments, they have not always been successful as problems have got in the way. For example, the oil price crisis in the early 1970s and the big increase in trade union militancy blew the Conservative Government of the day off course, which meant that they had to increase the burden of taxation in response. Likewise, in the first years of the Thatcher Government the burden of taxation increased sharply. As I have said, between 1979 and 1982 taxation freedom day moved from 30 May to 20 June, which was a sharp ratcheting up.

--- Later in debate ---

[Mr Hollobone]

I am most grateful for that intervention from my hon. Friend, who is a legend not only in his constituency, but in this place, precisely because of that sort of contribution. I also take it as a bid to serve on the Bill Committee. I for one would welcome that as an amendment that would improve the Bill, because I know that one of the major roles he performs in this place is providing helpful ideas to Members and the Government on how legislation might be improved, and what he suggests is one of the best examples I have heard. Like me, he believes that the burden of taxation in this country generally is too high and would like to see it fall. However, Members need not share our views to support the Bill. It is possible to be an enthusiast for more taxation to provide more public services and still to support the Bill. The Bill would make the burden of taxation transparent to everyone.

[Robert Halfon]

I hesitate to correct my hon. Friend, but it is possible to have more public services without necessarily increasing taxation.

[Mr Hollobone]

My hon. Friend is absolutely right. That is what Her Majesty’s Government are currently trying to do.

--- Later in debate ---

[Mr Hollobone]

That is a very good suggestion, and yet another reason for Opposition Members to support the Bill today.

My Bill does not propose that taxation freedom day be a bank holiday. What it does propose is that, basically, Her Majesty’s Government make official recognition of what taxation freedom day does. In the Taxation (Information) Bill, the Conservative party Bill that was launched in the other place in 2003, Lord Saatchi suggested the following mechanism for calculating how taxation freedom day should be arrived at. He said that taxation freedom day is

“determined by taking total tax revenue, including direct and indirect taxes, local taxes, capital taxes and national insurance contributions as a percentage of total income”,

and that it is

“calculated as general government tax revenue as a proportion of net national income”. —[Official Report, House of Lords, 9 July 2003; Vol. 651, c. 380.]

Net national income differs from the more familiar gross domestic product, or GDP, in two ways: first, net national income adds in net property and the entrepreneurial income of UK citizens from abroad; and secondly, it subtracts capital consumption. Net national income is therefore smaller than GDP, making the ratio of tax revenue to net national income larger than that to GDP.

I do not particularly mind what mechanism the Office for National Statistics uses for calculating taxation freedom day, because there are all sorts of suggestions about how it be done, but whatever mechanism is used, it ought to be clearly explained and consistent year on year, with lots of backdated calculations—perhaps even to the start of the 20th century, as my hon. Friend the Member for Bury North suggests—so that we can track consistently how taxation freedom day has moved around. There we have an official Conservative party suggestion from 2003, however, and it is a helpful contribution to the idea of pushing this Bill forward.

None other than the current Chancellor, before he became Chancellor, has spoken about taxation freedom day on two occasions. First, interviewed by Polly Toynbee in The Guardian on 2 June 2006, he said:

“This Saturday—June 3—we celebrate Tax Freedom Day. That is the point in the year when people stop working for the chancellor and start earning for themselves.”

In 2006, according to this enlightened quotation, the then shadow Chancellor saw the value of taxation freedom day. I very much hope that now he is the actual Chancellor he can put his words into practice. On another occasion, when interviewed in 2007 about taxation freedom day having slipped to 1 June in 2007 from 27 May in 1997, he was quoted in the Daily Express as saying:

“Here’s the proof that Gordon Brown’s stealth taxes hit us every hour of the working day. Hard-working people hand their money over to the Chancellor and the tragedy is that they cannot trust him to spend it wisely.”

In his role as shadow Chancellor, my right hon. Friend the Member for Tatton (Mr Osborne), has on two occasions publicly backed the idea of taxation freedom day. That is extremely helpful, and I hope that point of view is now consistent with Her Majesty’s Treasury in its present form.

On 6 June—D-day—2000, Mr Deputy Speaker, none other than your boss, the Speaker, tabled a ten-minute rule Bill called the Taxation (Right to Know) Bill, which had three main elements. If I may quote Mr Speaker in his absence, he said:

“In my Bill, the Treasury is required to prepare and send to every household and business an annual statement of the rates of each tax and excise duty…My second proposal is that the proportion of the purchase price of key products that is represented by tax and excise duty should be publicly displayed on the bills that customers pay…My third suggestion is that each year the Treasury should publish an assessment of the merits of each tax, considering not only its yield but its administration cost, its compliance cost and its economic cost in terms of lost output and diminished competitiveness.”—[Official Report, 6 June 2000; Vol. 351, c. 175-176.]

In his remarks to the House, the right hon. Member for Buckingham (John Bercow) stressed that our taxation freedom day, which in 2000 was on 29 June, was no fewer than 20 days worse than in the United States, where it had fallen on 10 May. The Bill proposed by Mr Speaker—before he was Speaker—in 2000 and my Bill essentially try to do very similar things. We are trying to make the burden of taxation on every individual business and organisation in this land far more transparent so that taxpayers can understand how much of their money is going to the Government and what it is being spent on.

That drive for transparency is being promoted by all sorts of organisations, not least the TaxPayers Alliance, which, in a major tax transparency campaign, has launched a tax app. For those of us who are rather technologically challenged, that might not be immediately appealing, but that will not be so for enlightened individuals such as my hon. Friend the Economic Secretary, or even my hon. Friends the Members for Harlow (Robert Halfon), for Bury North, and for Shipley (Philip Davies), who are at the forefront of IT developments. The Tax Buster app for smartphones allows shoppers to find out how much they really pay when buying everyday items. With a few details about any particular purchase, it can calculate how much money from an item went on VAT and duties.

[Robert Halfon]

Can my hon. Friend confirm whether this app would be compatible with BlackBerrys?

[Mr Hollobone]

I am most grateful for that intervention. I think that the answer is yes. One would have to access the Tax Buster website to find out how to do so. I think that the app is available for all kinds of cellphone technology. I know that my hon. Friend has the very latest gadget.

When an individual puts into the app a few details about their purchase, it tells them how much they had to earn before they paid taxes to have enough money to buy the product. For example, 20 cigarettes that cost £6.49 would have cost £1.24 without indirect taxes. Paying the £6.49—I am looking at my hon. Friend the Member for Dover (Charlie Elphicke), who I believe might occasionally buy the odd cigarette—requires earnings of £11.35 before income and corporate taxes.

[Mr Hollobone]

I am most grateful for that helpful intervention.

My next point will be of interest to my hon. Friend the Member for Harlow. Filling the car with £60-worth of petrol would cost only £23.86 without indirect taxes. Paying that £60 requires £104.84 in earnings before income and corporate taxes. For higher rate taxpayers, the equivalent figure is £122.91.

[Robert Halfon]

I thank my hon. Friend for being so generous in giving way. Does he agree that if the Government do not raise fuel duty as planned in January, the day on which taxation freedom day falls will be much earlier?

[Mr Hollobone]

That is a very good point and the Economic Secretary has heard it. She will also have heard the voice of the House expressed only the other week in support of my hon. Friend’s motion. The burden of petrol taxation has got to such a level that it is probably constraining economic growth in an unacceptable way, at a time when growth from anywhere would be most grateful.

--- Later in debate ---

[Mr David Nuttall (Bury North) (Con)]

As always, it is a great pleasure to follow my hon. Friend the Member for Shipley (Philip Davies), who has demonstrated the great need for this Bill. I start by congratulating my hon. Friend the Member for Kettering (Mr Hollobone) on preparing the Bill and bringing it before the House today. In his opening remarks, he said that he thought that this was a simple and straightforward measure and, of course, in many ways it is. I have a great deal of sympathy for the measure, and I would have thought that hon. Members on both sides of the House could agree on the issue of transparency on tax matters.

I start from the position of broadly supporting the principle of ensuring that taxpayers should be given clear information about the size of their tax burden. I was initially very encouraged that the Bill would go a long way towards improving the transparency of our tax system, but when I began to study the detail of the Bill and consider all the issues involved, I found that in many ways it is far from simple and straightforward. Indeed, this is a fiendishly complex matter, which is not as simple and straightforward as it may appear at first sight.

I wish to deal with several issues in my contribution, the first of which is why making the tax burden more transparent is so important. Taxation legislation is incredibly complex, covering a wide variety of taxes and duties. Indeed, it is worrying that the list is so long. Most people, when they hear the word tax, automatically think of income tax, but that is just one of several taxes with which the individual might be burdened. To income tax, we can add value added tax, national insurance, capital gains tax, stamp duty, fuel duty, alcohol duty, tobacco duty, air passenger duty, insurance premium tax, landfill tax, corporation tax, petroleum revenue tax, council tax, the climate change levy and the aggregates levy. Then, for anyone who has still managed to live frugally enough to be left with any assets after paying their way through life while paying all those taxes, subject to the various exemptions and the nil rate band, those assets are taxed again, with the imposition of the inheritance tax.

[Robert Halfon]

Is my hon. Friend not making the case for a flat tax?

[Mr Nuttall]

There is a great need for simplification of our tax system and a flat tax might well have a part to play in that.

Mark Twain is often attributed with the quotation that the only two certainties in life are death and taxes, and throughout the ages Governments have always cast around for things to tax. Over the years, we have had window taxes, beard taxes and brick taxes. I particularly like—only because it will give me the chance to mention that great son of Bury, Sir Robert Peel—the glass tax that was introduced in 1746, in the reign of King George II. At that time, glass was sold by weight and manufacturers responded to the tax by producing smaller and more highly decorated objects, often with hollow stems, which are today known as excise glasses. If anyone has ever wondered why the crystal glassmaking industry flourished in Cork and Waterford, it was because in 1780 the Government granted Ireland free trade in glass, which continued until 1825, when the tax in Ireland was restored. That led to a gradual decline in the industry until the glass tax was finally abolished by that great son of Bury, Sir Robert Peel, and his Government in 1845.

The complexity of today’s tax legislation is perhaps best illustrated by the fact that Pythagoras’s theorem can be set out in 31 words—I was told it was 24, but when I counted there were 31—the Lord’s prayer contains 66, the 10 commandments contain 179, the US declaration of independence contains 1,300 and the entire United States constitution, with all 27 amendments, apparently contains 7,818, but to get to grips with the United Kingdom’s tax system, one would have to purchase several weighty volumes such as Tolley’s tax manuals, setting one back several hundred pounds.

--- Later in debate ---

[Rachel Reeves]

The hon. Gentleman mentioned earlier—or it might have been the hon. Member for Bury North (Mr Nuttall), but I am sure that they agree—that the increase in the income tax threshold means that fewer people are paying income tax. The good thing about reducing VAT is that it has a progressive effect, because people on lower incomes spend a higher proportion of their income on VAT than people on higher incomes. A reduction in VAT would therefore help to get money in the pockets of the people who most need it at the moment in a way that a cut in income tax would not.

[Robert Halfon]

I am grateful to the hon. Lady for being so generous in giving way. She said that one way to reduce petrol and diesel prices would be to cut VAT. Is it not the case that the majority of businesses get their VAT back? What most people want is a fuel duty cut, which is why I welcomed the Government’s cut in fuel duty in the last Budget and hope that they will not increase it next year.

[Rachel Reeves]

The reduction in VAT would put money in the hands of families. Of course, most people who run businesses are also part of a family, so they would benefit from the reduction in VAT. Labour’s five-point plan for jobs and growth also includes a national insurance holiday for small businesses taking on new employees, so that plan would help families and businesses up and down the country.

Northern Rock

Robert Halfon Excerpts

Monday 21st November 2011 Commons Chamber

[Mr Hoban]

This transaction is subject to regulatory approval by the Financial Services Authority, which will carefully examine a range of issues, including the capital position of Virgin Money. I have made the following point before, but it is worth repeating. Virgin Money’s core tier 1 capital ratio is about 15%, whereas most of the UK high street banks are operating at about 10%, so is strongly capitalised. This deal is subject to regulatory approval, and that should give all of us confidence in the future of Northern Rock.

[Robert Halfon (Harlow) (Con)]

As well as reassuring anxious employees that there will be no compulsory redundancies, will my hon. Friend confirm that there will be few branch closures under the new Virgin Money scheme?

[Mr Hoban]

I can indeed. One of the commitments given by Virgin Money was to maintain Northern Rock’s existing branch structure, particularly the branches based in the north-east, and as it grows and expands the services I suspect that it will want to open more branches, so that more people can access the deals that it is offering.

Fuel Prices

Robert Halfon Excerpts

Tuesday 15th November 2011 Commons Chamber

[Robert Halfon (Harlow) (Con)]

I beg to move,

That this House welcomes the 1p cut in fuel duty at the 2011 Budget, the abolition of the fuel tax escalator, the establishment of a fair fuel stabiliser and the Government’s acknowledgement that high petrol and diesel prices are a serious problem; notes that in the context of the Government’s efforts to tackle the deficit and put the public finances on a sustainable path, ensuring stable tax revenues is vital for sustainable growth; however, believes that high fuel prices are causing immense difficulties for small and medium-sized enterprises vital to economic recovery; further notes reports that some low-paid workers are paying a tenth of their income just to fill up the family car and that high fuel prices are particularly damaging for the road freight industry; considers that high rates of fuel duty may have led to lower tax revenues in recent years, after reports from leading motoring organisations suggested that fuel duty revenues were at least £1 billion lower in the first six months of 2011 compared with 2008; and calls on the Government to consider the effect that increased taxes on fuel will have on the economy, examine ways of working with industry to ensure that falls in oil prices are passed on to consumers, to take account of market competitiveness, and to consider the feasibility of a price stabilisation mechanism that would work alongside the fair fuel stabiliser to address fluctuations in the pump price.

I would not be here today without the 116 MPs from all parties who have signed the motion; the many other Members who have Government posts who would have liked to have signed it; the 110,000 people who signed our e-petition; The Sun newspaper’s “Keep it Down” campaign; the FairFuelUK group led by Quentin Willson, who is in the precincts of Westminster today and who has been one of the leading campaigners for lower petrol prices; and Peter Carroll supported by the Daily Express. I also want to thank the Backbench Business Committee and its excellent Chair, the hon. Member for North East Derbyshire (Natascha Engel). Above all, I want to thank my hon. Friend the Member for Cleethorpes (Martin Vickers) who has been instrumental in helping me to secure this debate and the hon. Member for Na h-Eileanan an Iar (Mr MacNeil) who I am pleased will be summing up. I want to consider why fuel duty is the No. 1 issue in Britain. I also want to talk about the financial impact, the economic impact and, finally, the social impact.

With the agreement of FairFuelUK, today’s motion has been framed to unite the House and to win as much support as possible. As I said, that is reflected by the fact that 116 MPs from all parties have signed it so this has been successful. Last week, a poll in The Sun showed that 85% of people now believe that the duty rise in January should be cancelled. Other polls show that people are more concerned about petrol and diesel prices than anything else. We have the highest diesel price in Europe and one of the highest petrol prices. The Government’s figures show that sales of petrol and diesel have been falling since 2008 because fuel is becoming unaffordable.

[Mr Lee Scott (Ilford North) (Con)]

Does my hon. Friend agree that another problem is the difference in price of the same brand at different garages? At one garage on a motorway, we could see £1.50 a litre and, locally, we might see £1.29 a litre. Surely that is also a big problem.

[Robert Halfon]

I agree with my hon. Friend. Often if someone is driving up the M11—as I often do—or any other motorway, they are hostage to the various petrol stations. As I will say later, we need a market study into competitiveness.

[Daniel Kawczynski (Shrewsbury and Atcham) (Con)]

Does my hon. Friend agree that rural areas, such as Shropshire, where there are limited bus services, are adversely affected by these expensive prices?

[Robert Halfon]

Absolutely. I welcome the fact that the Government are going to introduce pilots in some rural areas. I know that people will talk more about that today, but I thank my hon. Friend for his remarks.

In real terms, adjusted for inflation, motoring fuel has never been this expensive, apart from twice in history during historic crises of supply—Suez in 1956 and the OPEC strike in 1973. The current situation is being driven by higher taxes and we have to be realistic and truthful about who pays the lion’s share of fuel duty: it is ordinary families driving to work, mums taking their children to school, small businesses that cannot afford to drive vans or lorries, and non-motorists who depend on buses and who are also being crushed by rocketing food prices as the cost of road haulage goes through the roof.

[Tony Cunningham (Workington) (Lab)]

The hon. Member for Shrewsbury and Atcham (Daniel Kawczynski) mentioned restricted bus services. Can I tell him that in large parts of Cumbria and other rural areas, there simply are not any bus services and people have to use their cars?

[Robert Halfon]

The hon. Gentleman is absolutely right. I was pleased to bump into him on holiday in Cumbria not so long ago. In certain areas, we cannot simply say, “People should use public transport.” People depend on their cars.

[Brandon Lewis (Great Yarmouth) (Con)]

I thank my hon. Friend for being so generous with his time. He mentioned small businesses. Coach companies in places such as Great Yarmouth are also affected. That affects the local economy because current prices make it difficult for them to have the money to invest further in their business and create more jobs and bus services for people locally.

[Robert Halfon]

My hon. Friend is exactly right. Later, I will show that transport firms are closing because of the high cost of petrol and diesel. His constituents are lucky to have him to represent them. As I said, small businesses have no choice but to use their vans and lorries, and non-motorists depend on buses and are being crushed by rocketing food prices.

[Neil Carmichael (Stroud) (Con)]

Will my hon. Friend give way?

[Robert Halfon]

Let me just carry on for a bit.

The jobless, who are struggling to get off benefits and out of the poverty trap, cannot afford to drive to work. Fuel duty is a tax on hard-working and vulnerable Britons. I accept that the Government need to raise revenue, but let us at least be honest about who pays this tax. When fuel duty was first introduced in the 1920s, it was a third of its current level in real terms. However, as ever, tax increases have had the engine of a Rolls-Royce but the brakes of a lawnmower. The fuel tax escalator was introduced in 1993. Labour then accelerated it to 6% above inflation, and it was finally halted in November 2000, when massive fuel protests brought the country to a standstill. That was when petrol was just 80p a litre.

[Ian Paisley (North Antrim) (DUP)]

Like everyone else, I welcome this debate. Does the hon. Gentleman accept that rural areas and the regions of this nation—places such as Northern Ireland—have the lowest salaries per worker but the highest fuel costs? That means fuel pricing has a disproportionate impact on people living in those parts of the United Kingdom. Importantly, Government taxation policy is encouraging fuel fraud, fuel laundering and fuel smuggling, meaning that the Exchequer is losing hundreds of millions of pounds each year.

[Robert Halfon]

As ever, the hon. Gentleman hits the nail on the head. He sets out how fuel prices are creating a more unequal society.

[Dr Eilidh Whiteford (Banff and Buchan) (SNP)]

Further to the point raised by the hon. Member for North Antrim (Ian Paisley), does the hon. Gentleman agree that this disproportionate taxation is absolutely unjustifiable for people in rural areas who have no choice but to drive, particularly those in poorer households and small businesses?

[Robert Halfon]

I absolutely agree with the hon. Lady, and I thank her for coming with me to the Backbench Committee to try to get this debate.

[Several hon. Members]

rose—

[Robert Halfon]

A lot of people want to speak, so I do not want to take too many interventions.

The coalition Government abolished the fuel escalator—we welcome that—and cut duty by 1p. They also introduced a semi-stabiliser, which means that duty will rise quicker than inflation only if oil prices are low for a sustained period. Thanks to this, motorists will pay £274 less on fuel duty during this Parliament than if the previous Government had been re-elected and stuck with their plans—but for most people filling up the family car, our prices are still the most expensive in Europe. Even bankrupt socialist nations such as Spain now have lower rates of fuel tax than Britain.

[Albert Owen (Ynys Môn) (Lab)]

I congratulate the hon. Gentleman on securing this debate. Does he acknowledge that in January there was a hike in VAT that affected individual motorists right across the country?

[Robert Halfon]

I am glad that the hon. Gentleman raises that. The majority of businesses that are suffering from fuel prices get their VAT refunded. Sadly, as I mentioned, the last Labour Government increased the fuel escalator by 6% ahead of inflation. When we cut fuel taxes in the last Budget, Labour Members voted against it.

Research has shown that residents in my constituency of Harlow are now paying £42 million in fuel taxes every single year. However, tax is not the only problem. There are suggestions that some of the big oil companies are behaving like a cartel, with a stranglehold over the market. Brian Madderson of the Retail Motor Industry Federation says that the small forecourts that he represents are now forced to buy fuel from the big players at a set wholesale price on a daily basis rather than on weekly or monthly terms. There is no competition from wholesalers on these terms. The Enterprise Act 2002 gives Ministers powers to ask for an independent market study, and that is what we need.

Another factor is that fuel prices are quick to rise but sluggish in coming down.

[Neil Parish (Tiverton and Honiton) (Con)]

Devon has as many roads as the whole of Belgium. We have very low wages, and many rural people are affected by fuel prices, in particular. There is also the question of diesel for lorries. Everything that goes by lorry uses diesel, so what about reducing its price in the way that it has been in many other countries?

[Robert Halfon]

My hon. Friend will be pleased to know that I prefer Devon to Belgium. Of course, he is exactly right.

In the past four months, the price of oil has fallen by 8% but fuel prices have stayed static. Oil firms protest that they are forced to buy raw materials in dollars and that currency fluctuations have made price cuts impossible, but analysis shows that this is false. The cost of Brent crude has fallen by nearly 20% since April this year, and yet the dollar has just risen by 6%.

[Neil Carmichael]

rose—

[Robert Halfon]

Let me carry on for a moment.

Big oil firms should not hide behind currency fluctuations. Statistics from the UK Petroleum Industry Association, which is funded by the major oil companies, show that in early 2010 the price of crude oil fell steadily, and yet retail fuel prices stayed high for months. Why was that? Ultimately, the only way to resolve this is through open-book accounting. If the big oil companies want to prove their innocence, why do not they volunteer to publish the financial data?

I want to turn to the financial impacts. Since 2008, our consumption of diesel and petrol has declined, and the Government forecast that it will continue to plummet next year.

[Tim Farron (Westmorland and Lonsdale) (LD)]

rose—

[Robert Halfon]

I give way to the president of the Liberal Democrats.

[Tim Farron]

My hon. Friend is being unfathomably but characteristically generous with his time. He says that consumption has gone down. Does he agree that consumption in rural areas has probably gone down as far as it is going to? Demand for petrol is so inelastic because people have only one way of getting to work, and that is by driving, even if they are on the minimum wage. This is now no longer an issue of environmental concern—it is about social justice.

[Robert Halfon]

I am pleased to say that I was also in the constituency of my hon. Friend for my holidays; it is such a wonderful part of the world. There is absolutely no doubt that fuel prices are threatening rural communities and preventing people from meeting and gathering together. Petrol is now so astronomically expensive that it is driving people off the roads and costing the Exchequer money.

[Neil Carmichael]

rose—

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order. We are not meant to be waving around the Chamber, Mr Carmichael. I am sure that you have already caught Mr Halfon’s eye.

[Robert Halfon]

Just to relieve my hon. Friend, I will give way.

[Neil Carmichael]

I wanted to invite my hon. Friend to Stroud for his holidays, as well, if he has not already been. If he does come, he will see that we have a large number of road haulage firms that are very concerned about the price of diesel. Of course, they are having to pass that on to small and medium-sized firms, which, in turn, means difficulties for them. We need to understand that and give further strength to his case in this House.

[Robert Halfon]

My hon. Friend makes the point better than I have; I completely agree with him.

In the run-up to this debate, lots of people came to me and said, “We all want lower fuel duty, but how can we pay for it?” In fact, this is back to front. Evidence suggests that we are on the wrong side of the Laffer curve and that lower taxes might increase revenues. The Government’s own figures show that between January and June this year 1.7 billion fewer litres of petrol and diesel were sold compared with the first half of 2008. The AA has done its analysis and says that this equates to £1 billion in lost revenue for the Treasury. As the Chancellor said earlier this year, we must put fuel into the tank of the British economy, and cutting fuel tax is the way to do it. The economic impact of this is disastrous. The ex-Tesco boss, Sir Terry Leahy, told The Sun:

“I don’t think people fully appreciated what an oil shock we’ve had. Filling up the family car has gone up 70% in two years, causing what was a steady recovery to go sideways.”

As some of my hon. Friends have said, UK haulage companies are being driven out of business as they face higher taxes here than in nearby countries such as Ireland, with which we share a land border. To their credit, the Government have taken some action, and foreign lorry drivers are now charged up to £9 a day to use our roads. But still the insolvency firm SFP has said that three quarters of transport business failures in the last year have been caused by excessive fuel prices.

Fuel prices are adding to our dole queues. In 2006, when petrol was just 95p per litre, experts at the London School of Economics published research showing that unemployed workers who could not afford to drive or to commute to jobs stayed unemployed for longer. Since then, fuel prices have surged by 40%, despite the recession, and many workers have suffered from redundancy or wage freezes. The Government are working on a rural fuel duty rebate for remote outer islands such as the Outer Hebrides and elsewhere. This is welcome, but it will help only a tiny number of motorists.

[Tessa Munt (Wells) (LD)]

I should like to add my comments to those of my hon. Friend the Member for Westmorland and Lonsdale (Tim Farron). I want particularly to draw attention to the fact that young people in my constituency, which is very rural, are limited in their choice of education because there are no bus services to speak of, and they are sorely tested in trying to get to their schools and colleges if they choose to use a school outside their area. This was highlighted even more by the fact that they brought transport—

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order. This is far too long an intervention. We want to get through a lot of Members who wish to speak. Some people are trying to intervene who wanted to catch my eye early on, and I will put them further down the list if that carries on. I want to get as many people in as possible.

[Robert Halfon]

I understand and agree with the sentiments expressed by my hon. Friend the Member for Wells (Tessa Munt). I am grateful to her for supporting the motion and for backing me at the Backbench Business Committee.

[Andrew Percy (Brigg and Goole) (Con)]

Will my hon. Friend give way?

[Robert Halfon]

I will not give way again because of what Mr Deputy Speaker has just said. I apologise to my hon. Friend.

I will turn to the social impact. In Harlow, the cheapest unleaded petrol costs £1.33 per litre. Most Harlow motorists are therefore spending £1,700 a year just to fill their tanks. For most people, that is the equivalent of £2,200 of income before tax—a tenth of the average Harlow salary. I met a Harlow man called Mr Barry Metcalf a few weeks ago. He is self-employed and uses his own car to commute to West Ham for work. He spends nearly £60 a week on fuel and has seen a 35% increase in the past year or two. The Government define fuel poverty as spending a tenth of one’s income on heating bills. What about spending a tenth of one’s income just on driving to work?

Of that £1,700, about £1,000 is taxation. That is why fuel duty is like a second income tax. The Office for National Statistics confirmed yesterday that fuel duty is regressive and that the poorest are hit twice as hard as the richest. Fuel duty is not just about economics; it is an issue of social justice. That is especially true in rural communities, which are being destroyed by fuel prices.

In conclusion, there is a strong financial, economic and social case for cutting fuel taxes. That is why we urge the Government to scrap the planned 4p fuel duty increases that are scheduled for January and August 2012; to create a genuine price stabilisation mechanism that smoothes out fluctuations in the pump price; to pressurise the big oil companies to pass on cheaper oil to motorists; and to set up a commission to look at market competitiveness and radical ways of cutting fuel taxes in the long term. There is an ethical case too. We must show that tax cutting is a moral creed. We must show that this is a Government for the many, not for the few; a Government who cut taxes for millions of British people, not just for millionaires. I urge the Government to listen to the 116 MPs who have signed the motion; to the 110,000 people who have signed the FairFuelUK e-petition; and to the many millions of families, small businesses and pensioners who are struggling with fuel costs. I urge the House to support the motion.

[Several hon. Members]

rose—

--- Later in debate ---

[Mr McCann]

I have already taken a couple of interventions. If my hon. Friend does not mind, I want to allow a couple of other Members to get in.

We need some answers from the Minister to explain the phenomenon that I have just outlined, because the public just do not understand it. If this debate is to have any credibility, it also needs to address some other issues. I do not believe the hon. Member for Harlow’s simplistic proposal that reduced prices will bring in more income. If he believes that we need to reduce fuel duty, he must tell us where the resulting cuts would be made. Or would he advocate increasing other indirect taxation, or direct taxation, to fill the gap?

[Robert Halfon]

I thank the hon. Gentleman for giving way, and for signing the motion. As I mentioned earlier, the AA has proved that the Treasury is getting £1 billion less in revenue because of the high cost of petrol. People are unable to afford to drive their cars, and the Treasury is therefore losing money. If we cut taxes, more money will go into the Treasury.

[Mr McCann]

That is the same explanation that the hon. Gentleman offered before, but I still do not understand it. I signed the motion because it was the only way of getting an opportunity to discuss this issue, which is important for our constituents. I would have preferred that the amendment tabled by my hon. Friend the Member for St Helens North—[Interruption.] Well, the hon. Member for Harlow is going to have to tell us how he proposes to fill the gap if fuel duty is cut. And if he believes that the gap does not need to be filled and that we should be taxed less, he will have to tell us what public services would suffer as a result.

A former Member of this House was once described as a vacuum surrounded by charisma. I think we all hope that, at the end of the day, this debate will not become a vacuum surrounded by synthetic anger.

--- Later in debate ---

[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.

Eurozone Crisis

Robert Halfon Excerpts

Thursday 27th October 2011 Commons Chamber

[Mr Osborne]

I think that the hon. Gentleman is being a little unfair to Conservative Back Benchers. Actually, quite a lot of Eurosceptics would argue—as I would, as a Eurosceptic—that we always said that this would happen if we joined the single currency. We always said that it would result in losing national sovereignty, co-ordinating budget policies or giving away powers over budgets. That is one of the reasons that we did not want Britain to join; it is why we stayed out. Given that monetary union logic leads to greater fiscal integration, we should let that happen, because I think that it will make the euro work better. As I have said, however, Britain wants no part of it.

[Robert Halfon (Harlow) (Con)]

Harlow taxpayers will be very relieved that none of their hard-earned money is to be used to prop up failed socialist Governments in Europe. They will also want to be sure, however, that my right hon. Friend will do all that he can to repatriate powers from Europe, unlike Labour Members, who believe that everything in the EU garden is rosy.

[Mr Osborne]

I absolutely agree with my hon. Friend that we are going to seek to rebalance those responsibilities. He also draws our attention to the fact that Greece and Spain are run by socialist Governments, but I do not want to intrude on their politics.

Oral Answers to Questions

Robert Halfon Excerpts

Tuesday 6th September 2011 Commons Chamber

[Mr Speaker]

We are grateful.

[Robert Halfon (Harlow) (Con)]

15. What fiscal measures he is taking to reduce the costs faced by businesses.

[The Exchequer Secretary to the Treasury (Mr David Gauke)]

In addition to taking action to reduce the fiscal deficit, the Government are putting in place a number of measures to create the right conditions for businesses to grow. This includes reducing corporate taxes to encourage businesses to invest, establishing enterprise zones, and increasing the support that research and development tax credits provide to small and medium-sized companies.

[Robert Halfon]

Does my hon. Friend agree that the new enterprise zones will transform the fiscal situation for local businesses? As there is a new enterprise zone in Harlow, will he set out the tax advantages that we will gain and when they will start?

[Mr Gauke]

I am delighted that one of the two enterprise zones in the south-east local enterprise partnership will be in my hon. Friend’s constituency of Harlow; 100% of business rates collected on the Harlow site will be retained for 25 years and are to be spent on local economic priorities. This will be possible from April 2013, once the necessary legislation is passed. Businesses will also benefit from simplified planning and Government support to ensure that superfast broadband is rolled out throughout the zone.

Summer Adjournment

Robert Halfon Excerpts

Tuesday 19th July 2011 Commons Chamber

[Robert Halfon (Harlow) (Con)]

I declare a lifelong interest in this subject and refer Members to the Register of Members' Financial Interests. I am delighted to have the opportunity to speak in this debate, because I want to talk about a tale of British craftsmanship at its best, our failure to compete and a remarkable industrial revival.

The automatic watch is almost the same now as when it was invented in 1770 and it has often triumphed over computers. For example, in 1970, after Apollo 13 was crippled by a ruptured oxygen tank, Jack Swigert’s Omega Speedmaster was famously used to time the critical 14-second engine burn, allowing for the crew’s safe return. Even today, the Omega Speedmaster is still the only watch to have been worn on the moon.

Secondly, I wish to discuss British craftsmanship. London led the world, changing the course of history in the 17th century by manufacturing accurate clocks that allowed us to sail throughout the world, trade, make maps and acquire the British empire. British companies such as Smith and Son, George Graham, Josiah Emery, and J. W. Benson forged the first clock-making industry, despite outbreaks of the plague and the great fire of London. Many hon. Members will know the story of John Harrison, a self-educated English clock maker who solved the problem of longitude and was eventually awarded thousands of pounds from Parliament.

Sadly, in the 18th and 19th centuries Britain lost its expertise. The decline of our watch industry is a British parable, just like the tin can.

[Mel Stride (Central Devon) (Con)]

My hon. Friend shares with me a love of watches. I know that he is also passionate about apprenticeships, so does he have anything to say about their importance in this area?

[Robert Halfon]

I will answer my hon. Friend in my later remarks, and I thank him for his intervention.

The decline of our watch industry is a British parable, just like the tin can and the car assembly line: we invent but others capitalise. In 1800, London was producing some 200,000 watches a year, which were exported not just to Europe, but to Russia, the middle east and even China. However, we became trapped by tradition. After Napoleon’s defeat in 1814, the Swiss started to make machine-made copies of London clocks and flooded the market with cheap products. Britain responded with protectionism and price controls. We failed to compete, and our expertise was lost to Switzerland, America and even the far east.

However, there has been a revival in recent times. In 1923, the British National Physical Laboratory produced quartz oscillators, and we all know about the production of the atomic caesium clock in 1955. These are the foundation of telecommunications, satellites and space travel. Famous British household names in horology have resurfaced: Dent & Company, and J & T Windmills, which even has a factory in Essex. Today, we have one of the greatest living names in horology, George Daniels, a British man who invented the coaxial escapement, which is the first practical new watch escapement in 250 years; it is a smoother watch movement that almost eradicates friction, and it was commercialised in 1999 by Omega. Those who have done the most to support this revival in Britain are the British Horological Institute and the Worshipful Company of Clockmakers. We have lost out to Switzerland and the far east, but we still have repair shops, a wealth of academic study and some ultra-high-end manufacturing.

So what is to be done? I welcome the Government’s policy on apprenticeships and the work of the Minister for Further Education, Skills and Lifelong Learning, who is in his place, in his promotion of craft. As I mentioned in my early-day motion 623, our funding for skills qualifications must be open to small specialist courses for industries such as horology. I strongly welcome what the Government did last year to extend funding for BHI certificates in clock and watch servicing, and repair, and I am grateful to the Leader of the House for his letter of support in that campaign.

However, there is a wider issue to address: many smaller qualifications are being discontinued because they are not profitable enough for awarding bodies. There are now just three horology training facilities in the UK: Birmingham City university; West Dean college; and the British School of Watchmaking. In Harlow, we are very lucky to have the Eversden family of watchmakers, and they show that in an age of digital technology there is still a public demand for the crafts of old. As George Daniels proved, there is still a demand for British horological genius. I hope that all possible support will be given to the watch-making and clock-making industry, which was once dying but is now showing signs of life in Britain today.

Motoring Fuel Costs

Robert Halfon Excerpts

Tuesday 14th June 2011 Westminster Hall

[Robert Halfon (Harlow) (Con)]

It is a privilege to speak under your chairmanship, Mrs Brooke. I am grateful to Mr Speaker for allowing this debate, and I want to congratulate FairFuelUK on its campaign for British motorists and for all the British businesses that have to buy petrol or diesel.

Let us get one thing straight: cars, vans and lorries are the lifeblood of British industry. More than 34 million vehicles are licensed in this country, which is one for every two people. That is why the current cost of petrol and diesel is one of the biggest brakes on economic growth and is crucifying many families who are struggling to keep their heads above water. That is especially true in my constituency of Harlow, where high costs are hurting many small businesses. I want to look at the current situation, the record profits of energy companies and what is to be done. As The Sun newspaper said in its editorial last Saturday:

“It’s welcome news that Parliament is to investigate why petrol prices remain sky-high even as the cost of oil plummets.

While they’re at it, they can look at why gas customers face 19 per cent rises from a firm with annual profits of more than £1 billion.

Consumers are being fleeced from all sides when buying essentials.

It's time our MPs stood up for us.”

I am here, with my colleagues, to stand up for motorists.

[Mr Marcus Jones (Nuneaton) (Con)]

Does my hon. Friend agree that there is huge frustration throughout the country about how, when the price of oil falls, the prices at the pumps seem to reduce very slowly and perhaps not to the same level, but when the price of oil increases, the petrol and diesel prices at the fuel filling stations seem to go up within minutes?

[Robert Halfon]

As ever, my hon. Friend has hit the nail on the head. I will set out in my remarks what is happening and what we should do about it.

Let us look at the numbers. In my constituency of Harlow, there are 33,000 households and 37,000 cars and vans. According to the Royal Automobile Club, which has done excellent work on the fair fuel campaign, we drive 9,000 miles a year. At 32 miles per gallon, an ordinary Harlow motorist is using 281 gallons or 1,277 litres every year. The cheapest unleaded petrol in Harlow that someone can buy is £1.33 a litre but in most cases Harlow motorists are spending £1,700 a year just to fill their tank. For most people, £2,200 of income before tax goes on that. That is a tenth of the average Harlow salary.

[Caroline Nokes (Romsey and Southampton North) (Con)]

I congratulate my hon. Friend on securing this debate. He has quoted some interesting statistics, such as the average driver in Harlow travelling 9,000 miles a year, but in rural constituencies such as Romsey and Southampton North the statistics are more frightening, because the average motorist is travelling 10,000 miles a year simply to access essential services. Does he agree that the problem is particularly distinct and severe in rural areas?

--- Later in debate ---

[Robert Halfon]

I very much agree that rural people are also being crushed by the price of fuel. I am glad that my hon. Friend is here today to represent her constituency and the many rural residents who are suffering so much.

[Mr Angus Brendan MacNeil (Na h-Eileanan an Iar) (SNP)]

Coming from an area where fuel is more than £1.50 a litre at all our fuel stations in the Hebrides, and regularly so, I am grateful that the hon. Gentleman has secured this debate. Does he agree that the Office of Fair Trading has to show more teeth in looking at the distribution of fuel? As noted, when the oil price goes up, the price at the pump increases quickly, but when falling, it does not happen at the pump at all. The OFT must start investigating the trade for fairness.

[Robert Halfon]

I agree that that should happen. I also have another proposal, which I will set out later. I congratulate the hon. Gentleman on his work on fuel prices in a debate in the main Chamber some months ago.

[Anne Marie Morris (Newton Abbot) (Con)]

My hon. Friend is being very generous in giving way.

Although the focus has very much been on the individual motorist, we have spoken a little about small business. If we combine the issues of rural businesses and micro-businesses, they are the ones that are badly hit. That is where we need the economy to grow. As for the range of prices, my hon. Friend talked about an average of £1.36 a litre, but in fact it is between £1.30 and £1.51, mostly in rural areas.

[Robert Halfon]

My hon. Friend is right. I will set out in a minute what the Federation of Small Businesses says about how the fuel price is crushing business and economic growth.

In total, my town is spending at least £63 million a year on petrol, of which about £40 million is tax. That does not even include gas and electricity bills, which are spiralling out of control. The budget of my local council is only £13.5 million a year. Imagine if people could keep even a fraction of that money in their pockets, to spend on the local economy, rather than giving it away to big oil companies, foreign countries and, dare I say it, the Treasury. However, I welcome what the Chancellor has done so far. When he refused to implement Labour’s petrol tax of 4p in April, and cut duty by 1p, he saved Harlow motorists at least £2.5 million every year, putting fuel into the tank of the British economy when we need it most.

[Rory Stewart (Penrith and The Border) (Con)]

I thank my hon. Friend for giving way and for securing this debate.

On the subject of the Chancellor’s initiatives, does my hon. Friend also support the decision to have rural fuel pilots, and acknowledge that constituencies such as my own of Penrith and The Border, where we have nearly twice the distance to travel to GPs, post offices and job centres, need to be recognised in a different way? The Chancellor is to be congratulated on the steps he has already taken on rural fuel, and he should extend them.

[Robert Halfon]

I very much welcome that initiative. I will say later that I believe a commission ought to be set up to look at all kinds of ways of reducing the price of petrol for motorists—that is one of them.

[David Simpson (Upper Bann) (DUP)]

rose—

[Robert Halfon]

I give way again, but then I must make progress.

[David Simpson]

The position in Northern Ireland is somewhat different from that in Harlow, because we have a land border. Currently, the Government are losing £280 million to £300 million a year on fuel smuggling and laundering of fuel. We are currently looking at the whole issue of corporation tax in Northern Ireland but, if duty on fuel were reduced or even if the suggested pilot scheme were in Northern Ireland, it would save the Government an absolute fortune, and would help the motorist and commercial enterprises in the long term.

[Robert Halfon]

As so often in Westminster Hall, as I said last week, I find myself agreeing with the hon. Gentleman. That might form part of the commission’s inquiry. At the end of July, I plan to go in a truck to Europe, to see how truckers there manage to get all their fuel cheaply, while English truckers are paying far more. The hon. Gentleman makes an important point.

Returning to my constituency, we are a town held to ransom by petrol prices. Motorists are robbed of a tenth of their salary just to fill their petrol tank. Fuel poverty is defined as spending more than a tenth of income to stay warm. That is all about domestic homes, but what about spending a tenth of income just to drive to work, which is what motorists are doing? The issue is also one for welfare reform. I welcome the Government making great strides with universal credit, lower taxes for lower earners and the Work programme. Yet all those benefits could be wiped out by the rising cost of fuel. Every 1p increase in the pump price will cost the average Harlow motorist £13 a year. For someone on a low income, perhaps commuting from Harlow to Basildon, the actual cost would be much higher. Inflation soon adds up, and we must not let petrol prices become part of the poverty trap and deter people from getting off benefits and into work.

Nor should we forget rural constituencies. My hon. Friend the Member for Hexham (Guy Opperman), who cannot be here because of his recent operation, has campaigned for many years against the fuel poverty suffered by his constituents. He wrote to me yesterday:

“fuel is a necessity in a constituency of 1,000 square miles, not a luxury.”

Throughout the country we see the same tragedy.

[Naomi Long (Belfast East) (Alliance)]

I congratulate the hon. Gentleman on securing the debate. He mentioned specifically job creation and its importance in welfare reform. In a survey earlier this year, one of the issues the FSB picked up was that companies faced with rising fuel bills would stop creating jobs and might also look at laying people off. That has huge implications, in particular in Northern Ireland, where we have a higher proportion of small to medium-sized enterprises, as well as heavier reliance on fuel because all our freight, for example, is road-based.

[Robert Halfon]

I welcome the remarks of the hon. Lady. I am about to come on to the FSB, but she is so right in what she says. I am glad that there is so much consensus in the Chamber among all parties.

[Andrew Percy (Brigg and Goole) (Con)]

I thank my hon. Friend for giving way. He is being very generous. The hon. Lady’s point about the Federation of Small Businesses is important, but we must not underestimate—my hon. Friend is not doing so—the impact of fuel prices on workers. My constituency has a low-wage economy in a large rural area, and an announcement was made today that the Humber bridge tolls will rise to £3 for each crossing. That will conspire to put people off looking for work, because they cannot afford to get to work.

[Robert Halfon]

That is my whole point. High fuel prices have become part of the poverty trap, and are a disincentive for people to get back into work, despite the Government’s excellent programmes, including the Work programme. I thank my hon. Friend for raising the matter.

Long-term stats from the Department of Energy and Climate Change show that in 1970 we used 25 million tonnes of petroleum in the transport sector. That has risen year on year, and doubled to 50 million tonnes today. But despite the UK being a net exporter of petroleum products, and despite the fall in the international oil price, our petrol prices are still sky high. In January this year, members of the Federation of Small Businesses said that if petrol prices continue to rise, 62% will be forced to increase their prices, risking inflation; one in 10 may have to lay off staff; 26% will be forced to freeze wages; 36% will have to reduce investment in new products and services; and 78% will see

“their overall profitability in jeopardy”.

Taxation is only part of the problem, and another major concern is transparency. As the AA, RAC, and FairFuelUK have said, if the 2p drop in the market cost of petrol had been passed on to motorists earlier this year by energy companies, it would have wiped out most of the impact of the 2.5p VAT rise. In May, I wrote to the chief executives of Shell, BP, Total, and ExxonMobil asking for price transparency so that we can see why prices are not falling. So far, only Total and BP have replied, but their replies essentially said, “Nothing to see here.”

In 2009, before the disaster in the gulf of Mexico, BP boasted profits of £8.7 billion. This year, Shell has reported first quarter profits up 40%, making its global profits nearly £2 million every hour.

[Susan Elan Jones (Clwyd South) (Lab)]

I thank the hon. Gentleman for giving way again, and for securing this debate. I particularly support the points made about rural constituencies. Does he favour statutory obligations on those companies to be transparent and to pass on their profits to consumers?

[Robert Halfon]

I do not want to unveil all my secrets at once, and if the hon. Lady waits a bit, I will give her my proposal.

Total’s profit rose 34% year on year, and ExxonMobil saw a 69% profit jump to $10.5 billion. We must acknowledge that some companies make a good return for pension funds, but a balance must be struck. I remember the fuel protests in 2000, when we were seriously concerned about the threat of petrol at 80p a litre. According to PetrolPrices.com, the excellent price comparison website, the most expensive unleaded fuel in the UK is now £1.51 a litre.

I accept that 64% of the petrol price is taxation, and I welcome the Chancellor’s steps to slash some of the planned taxes, but the big oil companies must play their part. Why are prices so different at petrol stations, and why are they raking in such astronomical profits when small businesses are being forced into bankruptcy by fuel costs?

[Mr Russell Brown (Dumfries and Galloway) (Lab)]

The hon. Gentleman rightly mentioned the oil companies. Did he witness the same thing as I did in my constituency eight or 10 weeks ago when some of the major supermarkets embarked on a price reduction of 5p a litre if customers spent a specific amount on goods, and at the same time raised the price of fuel by 4p or 5p a litre, which in turn forced the independents to put up their prices? The situation was contrived by some supermarkets.

[Robert Halfon]

The hon. Gentleman makes an important point, and that is why I am arguing for transparency. If supermarkets reduce prices, they must do so properly. We cannot have situations such as the one he describes. We often bash bankers, but oil barons are far worse, because they enjoy a semi-monopoly in the UK market, and most motorists have no alternative but to buy their products. We need transparency above all. Oil prices are falling, and we must ensure that the big companies cut their prices at the pump.

The green movement makes a case for expensive petrol, but modern vehicles have lower carbon emissions. Cars account for only 13% of our man-made carbon emissions. My argument—some hon. Members may say that it is controversial—is that environmentalism sometimes becomes a luxury for the rich, with no substantive answers, other than regressive taxes on energy. It is all too easy, in the cause of saving the planet, for the wealthy to insist that the poorest families should pay more in petrol taxes, and gas and electricity bills.

The impact of high fuel prices is particularly severe on road freight companies, and they are a major employer in Harlow. Road freight carries nearly 97% of everything we eat, wear or build with. High and rising fuel costs force the road freight companies to try to pass on the extra cost, and that stokes inflation. If they fail to pass on the increased costs, they go bust.

The road freight companies face a further cruel impact that the UK green lobby must consider. Fuel duty levels on the continent are about 24p a litre lower than in the UK, so hundreds of thousands of foreign lorries pour into the south-east of the UK and undercut UK hauliers. Foreign trucks pay no road tax here, and I welcome the Government’s plans to introduce a £9 a day charge, although I believe that it should be a lot higher. Those trucks pay no fuel tax in the UK as their tanks are big enough to last all week and all their fuel is bought abroad. They pay no employment taxes. They simply come into the UK, drive our UK freight companies out of business, and pay nothing to the Exchequer.

[Mr MacNeil]

Will the hon. Gentleman give way?

--- Later in debate ---

[Jonathan Edwards (Carmarthen East and Dinefwr) (PC)]

Will the hon. Gentleman give way?

[Robert Halfon]

I must make progress, but I will give way to the hon. Member for Carmarthen East and Dinefwr (Jonathan Edwards) as he has not spoken.

[Jonathan Edwards]

I congratulate the hon. Gentleman on securing the debate. He is making some important points about green taxation. I agree with such taxation, but does he agree that it should be linked to clear environmental criteria, and that if it is not it will lose public confidence, which would be a crisis for the Exchequer and for environmental policy?

[Robert Halfon]

Of course there should be environmental criteria, but people too often have their heads in the clouds and do not realise that low petrol prices would make a huge difference to ordinary people who must use their vans to drive to work, drive their trucks to do their job, drive their minicabs, or drive their kids to school.

What is to be done? I believe in competition and choice. First, when a market is cornered by vested interests and semi-cartels, such as big oil companies, it is right for the Government to establish conditions for a fairer market. We need a fuel rebate so that when the oil price falls, big companies face a choice: either they cut prices, or the Government will impose a windfall tax on profits, and use the money to cut petrol prices anyway. That would be the solution to the great British petrol rip-off. Instead of the oil companies having us over an oil barrel, it would make them honest, and stop them profiteering at the expense of small businesses and families on the breadline.

Secondly, we must commit to no more petrol tax rises in this Parliament. The Government are pro-business and pro-growth, and have already given a commitment to scrap the fuel duty escalator, which was pushing up prices above inflation. The Chancellor has delayed inflationary rises by a year for the next two years, but will the Government go further, and consider abolishing even the inflationary rises?

Thirdly, we must establish a commission to look at radical ideas, and other ways for the Government to raise revenue, and to address the unfairness of UK fuel duty being so out of line with the rest of Europe. We must consider more toll roads in exchange for significant cuts in fuel duty, and how a fuel price stabiliser could work.

In conclusion, we need fair fuel reform with a fair fuel rebate to push prices down, no new taxes during this Parliament, and a commission to look at radical ideas to get petrol taxes down to the European average in the longer term. The 37,000 motorists in Harlow and the 34 million vehicle owners in the UK are being fleeced. For the sake of future growth and jobs in our economy, we urgently need reform.

Amendment of the Law

Robert Halfon Excerpts

Wednesday 23rd March 2011 Commons Chamber

[Mr Andrew Tyrie (Chichester) (Con)]

This Budget will be judged on whether it keeps us on course to tackle the deficit, and on whether it provides a strategy to improve the long-run performance of the British economy. I will mention a number of concerns about the growth strategy shortly, but first let me say that we all need to be clear about one thing: we as a country are living beyond our means, with £1 in every £4 we spend being borrowed. That overshadows everything else today.

Despite all the clash of party cymbals, the gap between the parties on the scale of the action required to reduce the deficit is not so big; at least two thirds of the adjustment had been signalled by the previous Chancellor in his Budget a year ago, and I regret that he is not in the Chamber at present. It was courageous of him to set out that deficit reduction plan and those spending cuts before the election, but he did it, and today the current Chancellor has stuck to his plans to sort out the public finances. That has taken courage too, and he deserves our full support, as he has done the right thing.

I want to make three further points on the deficit. First, the Government are not reducing public expenditure to dangerous levels. At 40% of gross domestic product by the end of the Parliament, it will be returned to broadly the same level achieved by Labour in 2008. None the less—my second point—the retrenchment will feel more painful from this time on. The consolidation in each of the next three years, at about £25 billion to £30 billion a year, is three times the amount implemented in the first year of this Government.

The third point I wish to make on the deficit is that the pressure to flinch will now mount and we simply must not do so, for at least two reasons. First, doing so would cost the country a fortune in higher debt service costs as markets lost confidence in economic policy. Secondly, doing so would mean that the spending lobbies would have a field day and once they smelt blood the Government’s economic strategy would be put severely at risk.

I wish to say a few words about the growth strategy. Today, the Chancellor announced a comprehensive new approach, containing many measures that we should welcome, not least the large list of deregulation measures he cited, the simplification of planning and the measures to improve access to start-up capital. On all those, it is essential that each part of the strategy is consistent with other parts of public policy. Individually, direct measures always sound attractive, but the test is whether they form a coherent strategy. On those grounds, I warmly welcome what amounts to a new agenda for tax reform to create the most competitive tax system in the advanced world. I particularly support the reductions in corporation tax, which will bring it down to 23% within a few years.

It is an absolute disgrace that the UK now has the longest tax code in the world. The complexity of the system is getting in the way of thousands of small businesses in our constituencies—these are the very people who can take us back to sustained growth. We must have a tax system that allows enterprise to flourish. A few weeks ago, the Treasury Committee published a report setting out the key principles that should underpin tax reform. I can summarise them briefly: let us have more simplicity, let us have more stability and let us have lower rates and fewer reliefs, where possible. I note that in this Budget the Chancellor has abolished 43 reliefs and got rid of 100 pages of the tax code, which is a huge step forward. Let us have less meddling in the tax system as well. The Chancellor appears to have set us out in the right direction and it will be for the Treasury Committee and others to judge whether his proposals match up to the principles set out in our report, which match closely what others in the tax advice industry have concluded as being the right way forward.

The Treasury Committee will also examine who gains and who loses from the Budget. Last year, the Committee demanded an unprecedented amount of detail on the distributional effects of the Budget and the Chancellor responded by publishing more information than had ever been provided by a Chancellor before—I commend him for that. This will be particularly important with respect to the plan to merge income tax and national insurance contributions. Successive Chancellors of the Exchequer have examined that beguiling idea closely and in the end rejected it, largely because it hits the incomes of certain groups in unexpected ways. Perhaps its time has come, and the Treasury Committee will take evidence on whether the time has indeed come to implement it. We should also examine a number of other proposals that may have long-term distributional impacts, among which is the encouragement of charitable giving with the sizeable extension of gift aid and the inheritance tax reliefs. I hope that the vast majority of us in the House welcome that too.

The Committee will also do its best to examine the coherence of some of the Chancellor’s other measures when set against wider public policies. I can best illustrate that by alluding to points made to me by colleagues in the House in recent months. For example, the Chancellor announced the creation of 21 enterprise zones, which must be designed carefully to ensure that they create jobs and increase overall activity. The risk with such zones will always be that they distort activity at the boundaries and add no new jobs.

[Robert Halfon (Harlow) (Con)]

I thank my hon. Friend for his thoughtful remarks. Does he not agree that the enterprise zones should be extended out of the cities and into towns such as Harlow, which has a strong scientific corridor?

[Mr Tyrie]

It just crosses my mind that my hon. Friend might have an interest in Harlow. The crucial issue is that if we are to create areas that have special reliefs, we must not inadvertently end up merely moving activity around the country while adding nothing to the overall welfare of UK Inc. That involves a difficult judgment and we need to look extremely carefully at it.

Fuel Prices and the Cost of Living

Robert Halfon Excerpts

Wednesday 16th March 2011 Commons Chamber

[Ms Eagle]

I am rather sorry that I gave way so early in my remarks to that kind of comment. I do not recognise the right hon. Gentleman’s caricature of our policies for motorists. Perhaps he has been reading too much of the Daily Express. [Interruption.] Well, I am a motorist as well. He should realise that motorists are not confined to the Conservative Benches.

[Robert Halfon (Harlow) (Con)]

rose—

[Ms Eagle]

I will give way to the hon. Gentleman, but after that I should like to get some more remarks in.

[Robert Halfon]

I find the Labour motion astonishing, because over the past few years the hon. Lady’s party crucified Harlow’s motorists by putting up fuel duty by 6% a year and increasing it more than 12 times—and it was going to introduce another tax.

[Ms Eagle]

I will come to the details of the motion later. Perhaps the hon. Gentleman will do us the honour of staying in the Chamber and listening to that.

Taxes such as VAT are rising, and the Chancellor’s huge cuts in benefits and services are only just starting to bite. The Government are doing all this while the world economy is still very fragile after the international banking crisis. Global commodity prices are soaring, and these price increases are hitting people and businesses in Britain hard.

--- Later in debate ---

[Robert Halfon]

Will the Minister give way?

[Justine Greening]

I shall make a bit more progress, because I want to talk about the Labour party’s so-called fuel duty proposals, which are of course VAT proposals.

We are increasing child tax credits above the rate of inflation, giving lower-earning families an extra £210 over the next two years. Of course, poorer families will still receive more in child credits than they received under the previous Government, and, as I said, lower earners will be better off as a result of this Government’s changes to the personal allowance.

--- Later in debate ---

[Robert Halfon]

Is my hon. Friend aware that the previous Government planned six future fuel price increases, even though they knew the state of the economy?

[Justine Greening]

Absolutely. They left many tax bombshells, but perhaps that pre-planned tax increase was the tax road mine. There was a pre-planned additional per pence increase on fuel and a pre-planned year-on-year RPI increase—the so-called escalator. Ironically and utterly bizarrely, we are today debating a Labour motion that goes against the policy introduced by the previous Labour Government.

Fuel Costs

Robert Halfon Excerpts

Monday 7th February 2011 Commons Chamber

[Stewart Hosie]

I believe that the SNP opposed a number of the fuel duty increases. The hon. Gentleman may have been an honourable exception—I hope he was—but my memory tells me that Tory FrontBenchers abstained on some of those increases over the past few years when they were in opposition. He is generally right, but as I said, the debate is not about the cancellation or postponement of a single increase, however welcome that is, but about the implementation of a permanent stabilisation mechanism. Mr Willox said of that debate that:

“The FSB is right behind all moves to introduce a fuel duty stabiliser.”

[Robert Halfon (Harlow) (Con)]

I thank the hon. Gentleman for giving way on this very important subject. The Government pay around £7,000 per head per taxpayer in England, and yet they pay £8,500 for every Scottish taxpayer. Does he agree that if that subsidy were reduced, we would have more money across the country to cut fuel duty?

[Stewart Hosie]

I am always surprised when otherwise articulate, able and intelligent Members do not see the whole picture. When one looks at total tax and total income, rather than the mere, modest fragment of net identifiable expenditure, one sees a rather different story. Prior to the recession—independent figures stand this up—Scotland was about £50 billion in, £50 billion out. As the hon. Gentleman will recall, the UK ran a £0.5 trillion debt before the recession, so his argument is not particularly helpful, and nor does it really pertain to today’s motion.

Of course, some business sectors are hit rather harder than others. Some businesses have a little leeway in their pricing policy, but some have none. I was struck by the comments of Bill McIntosh, the general secretary of the Scottish Taxi Federation, who said:

“Taxi drivers”—

it is an important trade—

“are affected more than most by increases in fuel. Unlike other transport operators, taxi drivers can’t just raise their prices as fares are set by local authorities…The Scottish Taxi Federation welcomes and supports the proposal for a fuel stabiliser.”

That is important. The sector has a fixed pricing structure that it cannot adjust and rising input costs.

Many haulage firms—this is an extreme example—have already agreed long-term future contracts with a fixed price. There might be some variation, depending on the uplift in fuel, but it is unlikely, under the contractual arrangements, that they could be compensated for the very quickly and steeply rising input prices. In my view, the haulage sector suffers the largest single impact. According to the Road Haulage Association, operating costs have risen by 3.3% since last October. It tells me that fuel accounts for more than a third of the sector’s business costs, and that, in cash terms, an average rise is expected this year of £4,206 on the basis of increases over the past three months alone. That is quite extraordinary—an increase of £4,206 in the running costs per truck.

I suspect that that is why Phil Flanders, the Scottish and Northern Ireland director of the RHA, has said:

“The RHA…supports the SNP/Plaid Cymru motion to urge the Government to take immediate action to resolve the increasingly difficult situation that hauliers—and motorists—find themselves in due to the cost of fuel.”

He went on to say that it has always supported these

“proposals for a fuel duty regulator in order to bring stability to the costs of a haulage business where fuel”

in some places

“can account for around 40% of running costs…Whatever it is called—a stabiliser or a regulator”—

or a modulator—

“help is urgently needed for all hauliers and particularly those further from their market such as those in Scotland, Wales and Northern Ireland. Remote rural communities also deserve special help given the exorbitant price they have to pay.”

I will say more about that later. He continued:

“It cannot be stressed strongly enough that in the past year fuel prices have gone up by at least 14% and in the last 28 months there have been 8 fuel duty hikes amounting to a 25% increase. This is just simply unacceptable for the economy.”

I share that view entirely.

The Freight Transport Association has followed up that support and welcomes the effort

“to develop the fuel duty debate further. Lives and livelihoods up and down the country are suffering in the face of unsustainable and crippling fuel costs. For businesses still in the grip of tough trading conditions these costs severely restrict cash flow and a company’s ability to do business; sadly this can translate to job losses and the difference between solvency and insolvency.”

It says that when the price of fuel

“rises steeply it has an immediate impact on a company’s cash flow.”

Given how the banks are behaving, with credit tight and squeezed, cash flow is vital.

The FTA also says:

“As part of the Fair Fuel UK Campaign, the Freight Transport Association and the Road Haulage Association, along with backing from the RAC, are asking government principally to scrap the fuel duty rise planned in April and introduce a methodology for stabilising fuel prices.”

Indeed, Fair Fuel UK, which is supported by 20,000 road freight companies, the Royal Automobile Club, dozens of trade associations, other groups and tens of thousands of individual motorists, has said that it supports today’s attempt to raise this issue and its impact on the economy on the Floor of the House. It said that this

motion and debate will…add pressure to the Government to act”,

and act quickly, on what it calls a “fuel crisis”. There is no doubt that this is a crisis. It is also clear that there is not only an assessment of a real, immediate and serious problem, but a clear coalescing of those at the front line about the introduction of a stabiliser as the primary solution.

This is about not simply a fuel duty regulator or stabiliser, however, but the specific problems in remote areas.

--- Later in debate ---

[Justine Greening]

Obviously it will not be a short process involving a few weeks, but I think that the hon. Gentleman and his party know from their experience of the process involved in calling for the derogation that the route that we are taking can provide real support for motorists in rural areas.

[Robert Halfon]

rose—

[John Thurso]

rose—

--- Later in debate ---

[Justine Greening]

I agree with my hon. Friend. I too remember his party, before it joined the coalition Government, making the case for a rural fuel rebate.

I now give way to my hon. Friend the Member for Harlow (Robert Halfon), who tried to intervene earlier.

[Robert Halfon]

I welcome the debate, because hard-pressed constituents of mine, especially small businesses and families, are suffering hugely as a result of high fuel costs. May I make a special plea? National health service workers in my constituency who have to use their cars to visit patients receive tiny fuel allowances—in some cases, only 12p per mile—which remain the same regardless of the price of fuel. Will my hon. Friend consider changing the guidelines so that NHS workers need not suffer in that way?

[Justine Greening]

I shall ensure that I respond to my hon. Friend on that issue. A variety of concerns about the cost of motoring have been expressed in constituencies throughout the country in recent years.

I hope I can reassure Opposition Members that we are getting on with the process of requesting a derogation by trying to arrange some pilot schemes. I am sure they will be pleased to learn that, although we are still considering the exact scope of the pilots, we have announced our intention of including the Inner and Outer Hebrides, the Northern Isles and the Isles of Scilly, should we be given the necessary dispensation. I assure Members that we are pressing ahead as fast as we can, and we should appreciate their support in helping us to complete the process. I hope that they will be able to overcome any political barriers, do the right thing and back up the coalition Government as we go through this process over the coming months.

We recognise the importance of fuel prices to motorists and businesses. While we are looking at options in the run-up to the Budget, which I will discuss this afternoon, we can have one of two debates today: we can continue to argue about the problem and waste the opportunity presented by today’s debate by scoring points, or we can have a frank and open debate about how to reach the best solution and how we can find common ground. For instance, do we agree that the price of fuel and the affordability of motoring are important for motorists? The answer is yes. Do we agree that the unpredictable way in which the oil price fluctuates can create difficulties for households and businesses when it comes to budgeting? The answer is yes, although the Labour party never recognised that point in government, and I doubt whether it recognises that point in opposition—if it does, perhaps the hon. Member for Bristol East (Kerry McCarthy) will explain why it has suddenly changed its mind after having been booted out by the electorate.