Fuel Prices

Debate between Stewart Hosie and Sheryll Murray

Tuesday 15th November 2011 Commons Chamber

[Stewart Hosie (Dundee East) (SNP)]

I congratulate the hon. Member for Harlow (Robert Halfon) on securing this debate. It is important, and he will know that in the previous Parliament there were a number of debates on the subject and a number of attempts in Finance Bills to introduce a fuel duty regulator—precisely the price stabilisation mechanism that he describes in the motion today.

Going back over such debates from the previous Parliament is quite instructive, because it tells us why there is such anger among the general public. In the report of a debate in 2005 we read that the price of unleaded petrol had risen to 86p a litre, a rise of 6p in six months; by 15 May 2008 it had gone up to something over £1.10 a litre; and by the time of the Finance Bill debate in July 2008 it averaged £1.32 a litre.

The underlying price is more intriguing, however. In 2005 Brent crude had risen to $60 a barrel, up a massive $10 on the previous year. By the time of the debate on the 2007 pre-Budget report it had risen to around $84 a barrel. In the run-up to the 2008 Budget the price was $94 a barrel. As someone mentioned earlier, prices crashed through and spiked at around $140 a barrel. This week the price has stabilised at $114 a barrel, but the price at the pump has risen inexorably.

From 86p a litre in 2005, diesel prices in Dundee this week had risen as high as 140p a litre—£6.40 a gallon. In the constituency of the Chief Secretary to the Treasury diesel was nearly 145p a litre—£6.60 a gallon. In Kirkwall, in the constituency of the Liberal Deputy Chief Whip, the right hon. Member for Orkney and Shetland (Mr Carmichael), diesel is 152p a litre—£6.90 gallon—and in the constituency of my hon. Friend the Member for Na h-Eileanan an Iar (Mr MacNeil) it is almost £1.54 a litre. That is £7 a gallon, so it now costs £90 to fill up the tank of the average family saloon car. One can quickly see why people are so angry.

In our past debates, we heard about support outside Parliament from many organisations. The Road Haulage Association said:

“UK hauliers are struggling as never before to cope with continually rising fuel prices”.

Nothing has changed. The National Farmers Union and the Scottish Fishermen’s Federation said similar things. The Federation of Small Businesses said that it was

“behind the introduction of any mechanism which automatically uses extra tax revenues…to reduce prices at the pumps”.

And, my goodness, we need that now.

[Sheryll Murray (South East Cornwall) (Con)]

The hon. Gentleman mentioned the Scottish Fishermen’s Federation. Does he agree that many fishing vessels can reclaim the duty, so it does not affect them?

[Stewart Hosie]

Indeed, they can. What that organisation said at the time was:

“Transport is…a vital component of the fishing industry and cost increases there have applied even greater pressure, felt more acutely by the more remote fishing areas of the North West and the Northern Isles.”

I was paraphrasing what it said, as we have a whole four minutes each to speak. The point is that the response to spiralling costs under Labour was a fuel duty escalator, not a fuel duty stabiliser. The Labour Government set their face against every attempt to introduce a price stabilisation mechanism and, most cynically of all, increased duty to compensate for the temporary reduction in VAT.

The coalition’s response was to introduce the “fair fuel stabiliser”. That is what they called it. However, instead of using the windfall they already had from the North sea, they engaged in a smash-and-grab raid of £2 billion extra, with an increase in the supplementary charge. Hon. Members will remember that that led EnCore Oil to suggest that no tax would be paid on undeveloped and undiscovered oil. Other organisations said that very large projects were no longer viable because of the surprise Budget move. Chevron warned that the measure had

“shaken investor confidence to the core.”

Everyone was singing from the same hymn sheet except the Chancellor, who said that he

“did not expect investment to be damaged.”—[Official Report, 3 May 2011; Vol. 527, c. 604.]