Fuel Prices and the Cost of Living

Sajid Javid Excerpts

Wednesday 16th March 2011 Commons Chamber

[Charlie Elphicke]

rose—

[Sajid Javid (Bromsgrove) (Con)]

rose—

[Ms Eagle]

I have given way to the hon. Member for Great Yarmouth (Brandon Lewis) already.

The Office for Budget Responsibility produced the assessment last September, and it failed to make the numbers stack up for the policy. It calculated that the overall effect on the public finances of a temporary oil price rise would be close to zero, and that a permanent rise would create a loss to the public finances. In other words, there is no windfall for the Treasury to redistribute using a so-called fuel duty stabiliser mechanism.

No one appears to have told the Prime Minister about that and he clearly has not bothered to read the OBR report, because at Prime Minister’s questions a couple of weeks ago, he promised a fuel duty stabiliser in the Budget:

“we will look at the fact that extra revenue comes to the Treasury when there is a higher oil price, and see if we can share some of the benefit of that with the motorist.”—[Official Report, 2 March 2011; Vol. 524, c. 300.]

The Daily Telegraph called that statement “misleading and economically illiterate”. I could not have put it better myself.

--- Later in debate ---

[Charlie Elphicke]

rose—

[Sajid Javid]

rose—

[Ms Eagle]

I have given way to the hon. Member for Dover (Charlie Elphicke).

The House of Commons Library has estimated that that reduction would cost £700 million and take nearly 3p a litre off the price of petrol.

--- Later in debate ---

[Sajid Javid]

One of the most important components of the cost of living is the interest rate, which in turn determines mortgage rates. Does my hon. Friend agree that, because of the action this Government have taken, Britain today has a lower interest rate than countries in Europe that have far higher deficits? That is the very action that the shadow Minister sought to criticise.

[Justine Greening]

One of the problems is that the Labour party and the shadow Chancellor do not even accept that there is a structural deficit. My hon. Friend is absolutely right to point out that the steps we are taking to tackle the deficit and bring our public finances back under control and into a sustainable shape, so that we can fund public services affordably for the long term, will give us a much better chance of keeping interest rates and inflation low. That is critical to ensuring that we can support our economy more broadly.