Fuel Duty Debate

Full Debate: Read Full Debate
Department: HM Treasury
Monday 12th November 2012

(11 years, 5 months ago)

Commons Chamber
Read Full debate Read Hansard Text Read Debate Ministerial Extracts
Sajid Javid Portrait The Economic Secretary to the Treasury (Sajid Javid)
- Hansard - -

I beg to move an amendment, to leave out from “House” to the end and add:

“notes that as a result of the action this Government has taken to cut, cancel and delay fuel duty rises families will save around £159 on fuel costs by April 2013; further notes that under the previous administration’s plans, voted for by the Leader of the Opposition and the Shadow Chancellor, pump prices would be 10 pence higher than they currently are; also notes that motorists in island communities are benefiting from the fuel duty discount pilot scheme; recognises that this Government has introduced a number of other measures to support families including a £1,100 increase in the personal income tax allowance from April 2013, three years of council tax freezes and a cap on rail fares; commends that these measures have been in part affordable because of the Government’s record of success in tackling tax avoidance and evasion which is on track to raise an additional £7 billion per annum by the end of this Parliament; and welcomes the Government’s commitment to do more to help with the cost of living in the future subject to the constraints of the public finances.”

I see that the hon. Member for Kilmarnock and Loudoun (Cathy Jamieson) has been abandoned by her boss—

Sajid Javid Portrait Sajid Javid
- Hansard - -

My boss is in Brussels on Government business. The hon. Lady’s boss is probably too busy cooking lasagne for someone. As usual, he is busy chasing the headlines and has left her to pick up the pieces.

Rising living costs have made life difficult for millions of households. I know that first hand. Like millions of others, I have lived under financial distress, so I know what it is like to worry about paying the bills and living within a tight budget, and the Government know about that, too. Times are tough. We inherited the biggest deficit in the developed world and the largest in our peacetime history, and international commodity prices continue to rise, raising the cost of living. Since May 2010, the price of wheat is up 72% and the price of Brent crude is up 31%. While talking about commodity prices, I note that the price of gold is up 40%. Had the previous Prime Minister, the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown), not recklessly sold off the nation’s gold reserves, our country would be £10 billion richer. That is money we could have used to help hard-working families.

To clear up the mess left by the Labour party, we have had to make tough decisions, but we have prioritised the cost of living wherever we can. We have cut income tax, frozen council tax, capped rail fare increases and, moving on to the Opposition’s motion, we have delayed and cancelled the fuel duty rises that they supported.

Angus Brendan MacNeil Portrait Mr MacNeil
- Hansard - - - Excerpts

The Minister states that the price of wheat has gone up. Bread and butter prices have clearly increased dramatically. Is this not exactly the wrong time for the Government to put 3p on the price of a litre of fuel?

Sajid Javid Portrait Sajid Javid
- Hansard - -

That is exactly why the Government have taken action on the cost of living, which I will move on to shortly. Let me first talk about the Labour party’s record. It will not admit that it delivered the biggest deficit in the developed world. The shadow Chancellor said only three weeks ago that under Labour

“there was not a structural deficit”.

In fact, there was a structural deficit of £71 billion in 2007-08—more than 5% of this country’s GDP. We should thank him. Whenever anyone might need reminding why the Labour party must never be allowed to run this country again, the shadow Chancellor steps up to the plate—and this motion is another reminder.

Sheila Gilmore Portrait Sheila Gilmore (Edinburgh East) (Lab)
- Hansard - - - Excerpts

Does the Minister accept that it is misleading constantly to give a cash figure for the size of deficit and say that it is higher than in countries with a far lower GDP?

Sajid Javid Portrait Sajid Javid
- Hansard - -

I think that the hon. Lady needs to study the figures and understand what “percentage of GDP” means.

Andrew Selous Portrait Andrew Selous
- Hansard - - - Excerpts

On tax avoidance, will my hon. Friend confirm that this Government have done far more than Labour ever did to reclaim tax due to the Exchequer, and does he agree that the Opposition should give credit where it is due?

Sajid Javid Portrait Sajid Javid
- Hansard - -

As always, my hon. Friend is absolutely right. I will come to that later.

In the Budgets of 2009 and 2010, the shadow Chancellor and his colleagues endorsed seven rises in fuel duty between 2010 and 2014.

Dan Rogerson Portrait Dan Rogerson (North Cornwall) (LD)
- Hansard - - - Excerpts

The Minister finds himself in a strange set of circumstances whereby he is having to take the Opposition’s advice to abandon the policy that they pursued in government. What does he think it will be next—returning the top rate of income tax to the 40% that it was for most of their time in office, or perhaps reintroducing the 10p rate?

Sajid Javid Portrait Sajid Javid
- Hansard - -

My hon. Friend is absolutely right to point out that the Opposition are all over the place.

If we had found a way to halt all the rises that Labour had planned, we would have done so, but if we had gone ahead with its plans, fuel duty would have continued to rise. Fuel would be 10p per litre more expensive by now, costing the average Ford Focus driver £159 extra by April 2013. Let us put to bed once and for all the idea that Labour is the party fighting to support people on the cost of living.

Brian H. Donohoe Portrait Mr Donohoe
- Hansard - - - Excerpts

As the Minister was in his place earlier he will have heard me ask what is the amount of tax on a litre of petrol. Does he agree that, for the first time, a Government should allow that figure to be displayed on the forecourts of all our petrol stations?

Sajid Javid Portrait Sajid Javid
- Hansard - -

I can tell the hon. Gentleman that because of the policies of the Government he supported, there were 12 rises in fuel duty, so it is a lot higher today than it would have been otherwise.

This Government are taking action. Since the coalition came together, our economic plans have won international credibility. We have cut the deficit by a quarter. Because of this, we have secured record low interest rates and opened up Britain for business once again.

Andrew Percy Portrait Andrew Percy (Brigg and Goole) (Con)
- Hansard - - - Excerpts

The Opposition’s motion has absolutely no credibility given their record in government, and that is why I certainly will not support it. My hon. Friend is right to point out that the Government have done some good things in this respect. May I send him a message from the people of Brigg and Goole, which is that we welcome what has been done thus far but desperately want this rise to be cancelled or delayed again?

Sajid Javid Portrait Sajid Javid
- Hansard - -

My hon. Friend makes himself absolutely clear. He has been an avid campaigner on this issue, and his point of view is certainly being taken on board.

These low interest rates have helped hard-working families up and down the country with their cost of living. With interest rates low, mortgage bills are also low. If interest rates rose by just 1%, average mortgage bills would increase by almost £1,000 a year.

Bill Esterson Portrait Bill Esterson (Sefton Central) (Lab)
- Hansard - - - Excerpts

The hon. Member for Brigg and Goole (Andrew Percy) said that his constituents want the planned rise in fuel duty to be cancelled—as do my constituents—and the Minister said that he agreed with him, so why does he not support our motion?

Sajid Javid Portrait Sajid Javid
- Hansard - -

If the hon. Gentleman is patient he will hear about the action we have taken to help with the cost of living.

Marcus Jones Portrait Mr Marcus Jones
- Hansard - - - Excerpts

Who is trying more to help hard-working people with the cost of living—a Government who have frozen council tax for the past three years or a Government who doubled council tax during their term in office?

Sajid Javid Portrait Sajid Javid
- Hansard - -

My hon. Friend knows that the answer to that question is that it is this Government who are on the side of hard-working families.

Graham Stuart Portrait Mr Graham Stuart (Beverley and Holderness) (Con)
- Hansard - - - Excerpts

As my hon. Friend knows, many of my constituents live in sparsely populated rural areas, and the cost of fuel has an immense impact on their family finances, yet they realise that running the country with massive deficits puts their children’s futures at risk and means that money that could have been spent on public services is instead spent as Labour wants—on interest.

Sajid Javid Portrait Sajid Javid
- Hansard - -

My hon. Friend is absolutely right.

Charlie Elphicke Portrait Charlie Elphicke
- Hansard - - - Excerpts

There is opportunism not only on fuel duty but on tax avoidance. Under the previous Government, income tax paid by hard-working families in the working nation rose by 81%, but Labour Members let business off the hook, with corporation tax receipts going up by only 6%, because they were so obsessed with the prawn cocktail circuit.

Sajid Javid Portrait Sajid Javid
- Hansard - -

My hon. Friend has done a lot of work in this area and speaks with great knowledge. He is absolutely right to point out Labour’s inaction.

Guto Bebb Portrait Guto Bebb (Aberconwy) (Con)
- Hansard - - - Excerpts

I speak as a Member of Parliament representing a Welsh constituency. Is my hon. Friend aware that this Government made available to the Labour Administration in Cardiff money to freeze council tax in Wales, but they declined to do so?

Sajid Javid Portrait Sajid Javid
- Hansard - -

That is a shocking disclosure, but what more could we expect from Labour?

Eilidh Whiteford Portrait Dr Whiteford
- Hansard - - - Excerpts

We all know that the Government inherited a mess, but does the Minister accept that the increase in fuel duty will harm recovery by holding back businesses and households?

Sajid Javid Portrait Sajid Javid
- Hansard - -

I think that the hon. Lady would welcome the action that the Government have already taken on the cost of living and on fuel duty.

This Government have also been working hard to get people into work. There are more people in employment than ever before. Unlike Labour, we have no problem in welcoming the fact that the private sector has created over 1 million jobs over the past two years. That equates to more net new jobs created in the private sector in two years than were created in 10 years under Labour. With this support in place, we have strained every sinew to cut taxes where we can to ease the cost of living. We have cut fuel duty—a cut that Labour opposed—and frozen it for nearly two years. Fuel is now 10p cheaper than it would have been under Labour, helping family budgets. We have cut income tax for 25 million people and lifted 2 million people out of income tax altogether. We have frozen council tax for two years and announced that we will do it again next year. This Government have saved families £220 per annum on the average council tax bill. We have capped increases in rail fares so that commuters do not face substantially above-inflation rises.

Gloria De Piero Portrait Gloria De Piero (Ashfield) (Lab)
- Hansard - - - Excerpts

Can the Minister explain how tax cuts for millionaires helped hard-working families?

Sajid Javid Portrait Sajid Javid
- Hansard - -

If the hon. Lady is referring to the previous Budget, the changes we made to the top tax rate were covered more than six times by other changes that we announced. This Government want to create a tax system that is both efficient and helps to create jobs.

Ian Swales Portrait Ian Swales (Redcar) (LD)
- Hansard - - - Excerpts

Does the Minister share my surprise that the previous Government thought it was fine to give tax relief of £250,000 a year on pensions contributions, and may I confirm that not one of my constituents has complained about the cut to £50,000?

Sajid Javid Portrait Sajid Javid
- Hansard - -

My hon. Friend makes a good point and shows again where this Government are taking action to balance the nation’s finances.

We are doing a lot more to try to help those in need. We are investing more than £4.5 billion over this Parliament in affordable housing, delivering 170,000 new homes. We have replaced Labour's ineffective stamp duty relief with schemes that work, such as Firstbuy and NewBuy, helping more than 25,000 first-time buyers to find their way on to the first rung of the housing ladder.

Let us look at Labour's claims on tax avoidance. It wants us to clamp down on a scheme that uses a specific tax relief around travel expenses—a relief about which in 2008 the Labour Government, when presented with the facts, chose to do nothing.

Lyn Brown Portrait Lyn Brown (West Ham) (Lab)
- Hansard - - - Excerpts

Will the Minister give way?

Sajid Javid Portrait Sajid Javid
- Hansard - -

I will in a moment.

The Labour Government, when presented with the facts about this tax relief in 2008, chose to do nothing. They declared:

“The Government has considered—

Lyn Brown Portrait Lyn Brown
- Hansard - - - Excerpts

Will the Minister give way?

Sajid Javid Portrait Sajid Javid
- Hansard - -

If the hon. Lady is patient, I will give way in a moment—[Interruption.]

Lindsay Hoyle Portrait Mr Deputy Speaker (Mr Lindsay Hoyle)
- Hansard - - - Excerpts

Order. I do not need an answer back; I am just saying that the hon. Lady does not need to keep jumping to her feet. The Minister has promised to give way, but I do not know whether he is giving way now.

Sajid Javid Portrait Sajid Javid
- Hansard - -

Not yet.

The hon. Lady does not want me to tell the House what the Labour Government did when they looked at this tax loophole. They declared:

“The Government has considered all the consultation responses and believes that on balance the negative effects of changing existing legislation outweigh the benefits"

To address just this issue, this Government have already strengthened HMRC's enforcement and compliance teams, and protected tens of millions of pounds of revenue. So the nub of today's debate is a call to clamp down on avoidance of a relief that the Opposition declared they could do nothing about, to pay for a cut in fuel duty that they supported. Mr Deputy Speaker, you couldn't make it up.

Stewart Hosie Portrait Stewart Hosie (Dundee East) (SNP)
- Hansard - - - Excerpts

The Minister said he wanted to talk about tax avoidance, so let us talk about it. Why did the Chief Secretary to the Treasury promise at his party’s conference last year thousands of extra tax inspectors, and why have the Government failed to deliver any of them?

Sajid Javid Portrait Sajid Javid
- Hansard - -

I thank the hon. Gentleman for that question; I will come on to it.

Bill Esterson Portrait Bill Esterson
- Hansard - - - Excerpts

It would be great if the Minister spoke to the fuel duty motion—[Interruption.] The fuel duty part of the motion. He talks about tax avoidance. Many of my constituents used to work at HMRC—they do not any more because his Government got rid of them. How can he be serious about tax avoidance when he has not provided the new inspectors he promised and has cut some of the staff who were there when the Government took office?

Sajid Javid Portrait Sajid Javid
- Hansard - -

The motion mentions tax avoidance—he really should read his own party’s motion. The number of HMRC employees went down from 96,000 to 66,000 under his Government.

Labour Members had 13 years to clamp down more widely on tax avoidance. They had 13 years to do what they are calling for today. Did they take that chance? No. There were 13 years of inaction, and a consultation gathering dust in the Treasury archives. Even then, their figures simply do not add up. They claim that clamping down on this tax relief would bring in £650 million, but figures released while they were in power show it would bring in significantly less. If they ever want to regain credibility on the economy, they need to apologise for the mess in which they left the economy and learn to stop making irresponsible, unfunded promises.

Christopher Pincher Portrait Christopher Pincher (Tamworth) (Con)
- Hansard - - - Excerpts

Only the deluded or those who want to avoid tax will oppose the closing of tax loopholes. Many people have criticised some companies for avoiding tax, but a company called Stemcor pays only £163,000 from the £65 million of profits it makes each year—about 0.1% of its revenues. If companies are to be criticised, should not Stemcor be criticised?

Sajid Javid Portrait Sajid Javid
- Hansard - -

I thank my hon. Friend for that point. It would not be appropriate for me to talk about any individual company, but he makes a good point. Any company that is engaged in aggressive tax avoidance needs to explain itself.

Tax avoidance ran rife under Labour. We have taken action. We are investing £900 million to tackle tax avoidance and evasion, which will deliver £7 billion a year by 2014. We have already signed a groundbreaking agreement with Switzerland to make it much more difficult to evade tax. In March this year, HMRC closed a business property loss scheme within a week of its disclosure. At the G20, the Chancellor and his German counterpart announced concerted co-operation to close gaps in international standards and to crack down on international tax avoidance. Labour's former City Minister, Lord Myners, was on the radio only this morning welcoming this progress.

Underpinning all this progress, we are introducing a general anti-abuse rule so that no one can follow the letter of the law but abuse the spirit and get away with it—something else on which the Labour party never delivered. This is what real action on tax avoidance looks like.

Fiona O'Donnell Portrait Fiona O'Donnell (East Lothian) (Lab)
- Hansard - - - Excerpts

If it is all going so well, why cannot the Minister do something to help my constituents who cannot afford to fill up their cars?

Sajid Javid Portrait Sajid Javid
- Hansard - -

This Government do not shy away from making tough decisions. We are getting on with cleaning up the mess left behind by the previous Government, and we are doing everything we can to help hard-working families with the cost of living and putting money back into their pockets. Our action on fuel duty is a part of this. Fuel duty is currently 20% lower in real terms compared with its peak in March 2000, and 7% lower compared with May 2010. If we had continued the policies of the previous Government, pump prices would, quite simply, be higher—fuel would be 10p more expensive per litre. I know that some hon. Members will call for a further freeze in fuel duty today. I can assure them that the Government understand the financial pressures that hard-working families are facing. Subject to the constraints of the public finances, this Government are determined to keep helping families with the cost of living.

I urge hon. Members to reject the Opposition's motion and to support the Government's amendment.

None Portrait Several hon. Members
- Hansard -

rose—

--- Later in debate ---
Bill Esterson Portrait Bill Esterson
- Hansard - - - Excerpts

I am always happy to be guided by you, Mr Deputy Speaker. I wonder whether the hon. Gentleman is aware of the research—

Sajid Javid Portrait Sajid Javid
- Hansard - -

Reading!

Bill Esterson Portrait Bill Esterson
- Hansard - - - Excerpts

Thank you. I wonder whether the hon. Member for Ipswich (Ben Gummer) is aware of the research by FairFuelUK that points out that a 3p increase in duty would deliver a 0.1% drop in GDP and the loss of 35,000 jobs. Does he accept those figures?