Petrol and Diesel

Debate between Robert Halfon and Stewart Hosie

Wednesday 23rd May 2012 Westminster Hall

[Robert Halfon]

The Minister will have heard what my hon. Friend says. I am sure that the fact that so many people are here today making similar points will not be lost on the ears of a Minister who we know listens.

[Stewart Hosie (Dundee East) (SNP)]

Before the hon. Gentleman moves off rurality, can I make the issue real? A 10p difference per litre is nearly 50p a gallon or £5 a tank. For someone commuting and filling their tank twice a week, that is hundreds of pounds a year. I hope that he will take the opportunity to reinforce to the Minister that for ordinary working families who are struggling in this austerity period, that extra few hundred pounds makes a huge difference.

[Robert Halfon]

I thank the hon. Gentleman for his remarks. As I will say in my conclusion, statistics show that motorists in my constituency on average earnings pay one tenth of their income just filling up the family car. The Government say that people face fuel poverty if they spend one tenth of their income on fuel. People are forced to use their cars, and in my constituency—and, I am sure, elsewhere—they are paying one tenth of their income to fill up the family car.

I will make a brief point about the banks; I am nearly done. Last year, western Governments tried to release oil to cut pump prices, but banks bought up at least £1.6 billion of it. There is evidence that a lot of it was stored in silos at sea rather than entering the market, keeping prices high. America is introducing tough new penalties for market manipulation. I urge the Government to do the same in Britain. If Governments around the world do the right thing and release oil stocks, we cannot allow banks to buy it up, keep it at sea and hurt the struggling motorist.

What is to be done? I am a realist. I do not believe in “Charge of the Light Brigade” politics; I much prefer the battle of Agincourt. I accept that we do not have a magic money tree, but the big oil companies are not struggling. In the first quarter of this year, Shell had profits of $7.6 billion, BP $5.9 billion and Exxon Mobil $9.4 billion. It is a similar story at Chevron and ConocoPhillips. At the end of 2011, those firms had $58 billion in cash reserves. In order to find the money to stop price rises and help hard-pressed motorists, the Government could consider a windfall tax to fund cheaper petrol at the pumps. A windfall tax was imposed before, but on North sea oil in particular. I am asking the Government to consider a windfall tax on oil companies in general.

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.

Fuel Costs

Debate between Robert Halfon and Stewart Hosie

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.